What are the ‘new’ bankruptcy laws that everyone is talking about?
The ‘new’ law that took effect in October, 2005 is called BAPCPA – Bankruptcy Abuse Prevention and Consumer Protection Act. This makes filing Chapter 7 bankruptcy more difficult for people whose income is above a certain level based on their family size.
One of the changes brought about by the new law is that a Credit Counseling and Financial Management class must be completed prior to and after filing bankruptcy respectively. This is debtor (those filing bankruptcy) education in the form of a class the provides Bankruptcy alternatives.
If a person has filed bankruptcy within the last 8 years and received a discharge through Chapter 7, then they cannot file bankruptcy again until 8 years after the original filing. If a person has filed Chapter 13 bankruptcy within the last 6 years, then they cannot file bankruptcy again until 6 years after the original filing.
Debtors are now also required to produce their last year’s tax return and two months worth of pay stubs to the trustee a week before their creditors’ meeting. This is to verify that the debtor qualifies to file bankruptcy under the new income guidelines. Income guidelines are based on household size and varies from state to state. However, even if the income is slightly above the median level the debtor may be able to get bankruptcy relief through means testing.
These are only some of the changes made by BAPCPA. In essence, the goal of the law is to make filing bankruptcy more ‘difficult’
This is not legal advice. Please contact an attorney in your State if you have any specific questions for your situation.
