The Bankruptcy Abuse and Prevention Act is a law that went into effect in 2005. Credit card companies strongly supported the new laws, while they didn’t get everything they wanted to be included in the law, they did get a lot of changes to the way people file bankruptcy.
The means test is a formula used to determine if you have any “disposable income.” The state you live in median income is used as the base. If you are below the states median income, you may automatically qualify to liquidate your debt. Some high-income earners may not be allowed to file Chapter 7 that discharges all their debt. Instead, these earners will be required to file Chapter 13 and make a court-approved repayment plan. If high earners can prove their debt is unusually high, they may still qualify to liquidate their debt.
Individuals are required to complete credit counseling. The counseling is to designed to explore your financial options. The counselors advise can include debt repayment plans or bankruptcy.
A second type of counseling is also mandated, the “Debtor Education.” You can find a court-approved credit counseling and debtor education agencies on the U.S. Trustee’s Web site.
Filers and lawyers must verify and attest to the accuracy of submitted information; this created more work for filers and bankruptcy attorneys from before the Bankruptcy Abuse and Prevention Act.
You must also live in a state for at least two years before you can file, preventing individuals from moving just to get better property exemptions. Since states differ in what you are allowed to keep during bankruptcy, filers have been known to move to better their chances.
If you want to learn more about the Bankruptcy Abuse and Preventing Act and how it will affect you if you are considering filing, contact a Dallas bankruptcy attorney.