A Quick Look at the BAPCPA of 2005

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 was signed into law for the purpose of reforming existing bankruptcy regulations. It tightened restrictions and introduced debtor education, which were measures that were intended to reduce incidences of bankruptcy fraud. Although BAPCPA does create more obstacles for debtors to clear before they can file for bankruptcy, most people who consult bankruptcy attorneys are able to get past these restrictions successfully.

Means Test

One of the primary changes that this law made to Chapter 7 proceedings is to require petitioners to pass the means test. The means test prevents debtors from filing for Chapter 7 if their income is high enough to fund a Chapter 13 repayment plan. If so, they can only file for Chapter 13. When you consult a bankruptcy lawyer, you should bring all of your relevant financial documents, including proof of your income. Your lawyer will determine if you can pass the means test or if you must file for Chapter 13.

Debtor Education

BAPCPA requires that all debtors complete two financial education sessions. The first must be completed before filing the bankruptcy petition. This is a credit counseling course, which must be taken from an approved agency. Debtors must file their certificate of completion with their bankruptcy petition. Later, debtors must complete a personal financial management course before they can have their debts discharged.

Exemption Law Restrictions

Another component of this new law only affects debtors who have moved to a new state within the past few years. These individuals may have additional restrictions regarding the exemption laws in their current state and their previous state. This clause was intended to discourage filers from moving to a state with generous exemptions for the primary purpose of protecting personal property when filing for bankruptcy.

At Cutler & Associates, Ltd., we pride ourselves on working closely with each client to ensure that he or she is fully informed about each step of the bankruptcy process. During your consult at our law firm in Schaumburg, you’ll get clear answers to your questions and sound legal guidance to help you move forward.