The bankruptcy laws haven’t changed much since President Bush signed “The Bankruptcy Abuse Prevention and Consumer Protection Act” into existence in 2005. With the 2005 changes, filers saw new credit counseling requirements, the addition of the Means Test, changes to the Chapter 13 repayment plan period, limitations on state exemption eligibility, homestead exemption specifications, changes to the method of dealing with problematic high interest car loans, change in priority of child support and alimony, increased bankruptcy lawyer liability for false information, tithing allotment, etc. It was a lot of change and some are still growing accustomed to the new information and requirements. If you’re unsure of the specific effect the 2005 changes may have on your bankruptcy filing, consider the details before you make your decision.
As of 2005, credit counseling is now required. Every filer must complete credit counseling with a United States Trustee’s Office approved agency in order to ensure consumers are sure of their decision to file. The session is required to take place within 6 months prior to filing. Additional financial education is required during the midst of the bankruptcy process prior to filers receiving their discharge.
Filers are now required to pass a Means Test to measure their income/ability to pay. Results could exclude individuals from filing for Chapter 7, leaving them eligible only for a Chapter 13 repayment plan. There were also changes made to the Chapter 13 repayment plan repayment period – changing it from 3 years to 5 years.
New limitations and requirements were placed on the homestead exemption with value caps dependent upon the time the property was acquired. (For specifics regarding homestead exemptions and how they affect your bankruptcy filing, contact your bankruptcy attorney).
2005’s changes also saw the re-prioritizing of child support and alimony from #7 to #1.
Under the new law, bankruptcy lawyers can be held liable for passing information to the bankruptcy court that was incorrect. The lawyer can be fined even if their client supplied them with false information.
The 2005 changes also enabled filers to donate up to 15% of their income to charity. This allows some filers who are only eligible for Chapter 13 according to the Means Test to drop their income down below the threshold for Chapter 7 filing.
If you are unsure of any of the 2005 changes as a result of the Bankruptcy Abuse Prevention and Consumer Protection Act or how they affect you as you file for bankruptcy, contact your Los Angeles bankruptcy attorney today at Westgate Law.