The Bankruptcy Abuse and Prevention Act was a bill enacted in 2005 and lobbied heavily by the credit card companies. While the credit industry did not get everything they asked for, they did get a lot of changes made to the Bankruptcy Code, making it more difficult and costly for individuals to file bankruptcy.
The change in the laws created more work for the attorneys and more rules for the filers. These additional requirements caused bankruptcy fees and costs to jump up significantly, making it less accessible to every filer.
People considering filing bankruptcy are now required to attend credit counseling before they can file their papers with the bankruptcy court. The counseling advice is intended to discuss options for handling your debt.
A second counseling session is required before you can complete your bankruptcy, this one is a debtor education course to teach you how to handle your finances better and avoid bankruptcy in the future.
You used to be able to file Chapter 7, “elimination bankruptcy,” regardless of your income. Now you must pass a means test proving that you make the same or less than your state’s median income. The law does allow adjustments based on your family size and specific area that you live in. If you make more than your state’s average income, you will be required to file Chapter 13, “reorganization bankruptcy” instead.
Before the law, filers would move to a state with more favorable exemption laws, thus keeping more of their assets and money, while eliminating more debt. Now you must live in the state you intend to file in for a minimum of two years before filing bankruptcy.
If you have questions about bankruptcy and how it could benefit you and your family, please contact a McAllen bankruptcy attorney today.