Bankruptcy Abuse Prevention and Consumer Protection Act

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 is
part of the U.S. Bankruptcy Code. This act made significant changes to the Bankruptcy Code. The act was written to prevent abuse of and profit from the bankruptcy process. The act also protects frivolous filings, including the requirement that you must submit tax return information to have your bankruptcy petition proceed.

Most of the people that file for bankruptcy are honest, hard working people that need a fresh start with their debt.

The new law makes it more difficult for some debtors to file Chapter 7 to have their debt wiped away, and instead, be required to file Chapter 13 to pay back a portion of the debt. The BAPCPA now calculates a debtor’s income and compares it to the median income in the state the debtor lives.

Education

Under the BAPCPA debtors who file bankruptcy are required to complete an approved credit counseling course and a financial management program. The purpose of the classes is to teach better financial habits after your bankruptcy is complete.

Moving

Another critical feature of the new act concerns residency of the debtor. If a debtor moves to a new state to try to get better exemptions while filing for bankruptcy, the case must use exemptions from the previous state for the prior two years.

More Expensive to File

The new act adds additional expenses for bankruptcy filers, making it more difficult and costlier. The new act also brings additional paperwork, resulting in additional filing fees. Increased attorney costs are also necessary since attorney now need to investigate their client’s financial information.

If you are struggling with debt and are considering bankruptcy to get some relief, contact an Elk Grove bankruptcy attorney to clear up any confusion over the bankruptcy laws and find out what is your best course of action to get a fresh financial start.