The New Bankruptcy Laws
Widespread changes in consumer bankruptcy law took effect on October 17, 2005, with passage of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. This bankruptcy reform law is targeted at preventing abuse and providing relief to unsecured consumer creditors. This is usually the credit card companies, who usually bear the brunt of the losses from serial bankruptcy filers.
Below is a brief outline of the new bankruptcy code enacted with the bankruptcy reform law.
- A means test was introduced to determine whether a person is eligible to file Chapter 7. The means test will be used by the courts to determine eligibility for Chapter 7 or Chapter 13 bankruptcy.
- Consumer credit counseling is now required for most people prior filing for bankruptcy. You must use a government approved consumer credit counseling service (CCCS) and obtain a certificate showing proof of completion of the counseling.
- After your bankruptcy concludes but before any of your debt is discharged, you will have to participate in a government-approved financial management education program. As with the CCCS, you will need to obtain a certificate of completion to move forward with your debt relief.
- If you owe money to a family member for unpaid child support or alimony, this debt is now going to take priority over any other creditor. Also, if you file a Chapter 13 bankruptcy, you must repeatedly prove that you’re current on any post-filing payments to continue to move forward in your bankruptcy.
- There not as many automatic stays (a legal term that stops creditors from taking collection action against a you). Bankruptcy filings no longer will delay or stop evictions, driver’s license suspensions, collections for child support, or divorce proceedings.
- Discharge of debt in a Chapter 13 bankruptcy is not as broad as it was prior to the bankruptcy reform law. The Chapter 13 will no longer discharge debts related to fraud, tax claims for which no claims were filed, or previous tax years in which no tax returns were filed.
- The length of time required between bankruptcy filings has been lengthened. This length of time varies depending on what type of bankruptcy has been previously filed and is being attempted.
- The bankruptcy filer’s duties have been greatly expanded to include a long list of reporting duties. This list is found at 11 U.S.C. 521 and is complex. It primarily consists of reporting duties to support information you file in the bankruptcy forms and schedules. Your bankruptcy attorney at Sparber Rudolph Annen will be able to guide you in these reporting requirements.
- The bankruptcy filer must have resided in the state in which he or she if filing for at least two years to use that state’s exemptions. Otherwise, the filer must use the exemptions of previous state of residence.
- The new bankruptcy law increases the length of time between Chapter 7 discharges from six to eight years.
The above outline is by no means complete. If you have questions or need more information, please contact the bankruptcy attorneys at Sparber Rudolph Annen to set up an appointment to discuss your situation.