New Bankruptcy Laws
The most significant change to bankruptcy law in recent years came in 2005 in the form of the Bankruptcy Abuse Prevention and Consumer Protection Act. Still often called the "new bankruptcy law," BAPCPA introduced a number of changes to the way bankruptcy cases work.
A major reason for working with a bankruptcy lawyer is so that filers can make sure they're up to date on any new bankruptcy laws that might affect the way their case should be handled.
To connect with a bankruptcy lawyer and learn about the most recent bankruptcy laws and how they may affect you, simply fill out the below case review form.
Major Bankruptcy Law Changes
Here's a summary of some of the major changes the "new" BAPCPA bankruptcy law made:
- Chapter 7 means test: Since 2005, Americans interested in filing under Chapter 7 of the U.S. Bankruptcy Code have had to qualify for Chapter 7 protection by passing a means test. The test is designed to make sure that Chapter 7 protection, which is more sweeping than Chapter 13 protection, is reserved for filers in the greatest financial need. The means test consists of comparing your household’s income to that of the median household in your state and then comparing your expenses.
- Credit counseling briefing: Another major change BAPCPA introduced was the pre-filing requirement of a credit counseling briefing. In order to have your petition accepted by the bankruptcy court, you must meet with an accredited credit counselor to determine whether bankruptcy is, in fact, the best choice for you. If you're considering bankruptcy, you may want to meet with a credit counselor soon, so that if and when you decide to file, you'll have this requirement taken care of.
- Financial management course: The third major change BAPCPA introduced was the pre-discharge financial management (sometimes called "debtor education" course). All filers must complete this course before they're eligible for their bankruptcy discharge. In other words, your bankruptcy case can't officially end until you've completed the course. The good news is that this course contains information on a variety of financial management strategies designed to help bankruptcy filers maintain healthy finances in their post-bankruptcy lives.
How Will the New Bankruptcy Laws Affect You?
When BAPCPA was first passed, many consumers worried that qualifying for bankruptcy protection would be more difficult than it used to be; however, in the years since 2005, filing rates have suggested that most people who need bankruptcy protection are still able to get it. Here are a couple things to keep in mind:
- Don't delay the credit counseling course: If you're considering Chapter 13 bankruptcy as a way to prevent foreclosure, you can't wait until the last minute to file because of the credit counseling requirement. Without proof of credit counseling, the court may not accept your case.
- Don't fear the means test: If you're interested in filing for Chapter 7 bankruptcy, don't worry too much about the Chapter 7 means test – a lawyer can help you figure out whether you qualify, and if you don’t, you may be eligible to file under Chapter 13.
Connect with a Bankruptcy Lawyer to Discuss the New Bankruptcy Laws
If you're ready to learn more about current bankruptcy law or bankruptcy laws specific to your state, take this opportunity to connect with a bankruptcy lawyer practicing in your area.