On October 17, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect.
This law did not change the basic bankruptcy law in many significant ways, but it did cause some major changes.
You may not qualify for Chapter 7 Bankruptcy relief if your family income exceeds our state median income as compiled by the census bureau. This figure changes each January as new figures are published.
If your income exceeds the median income, you must then qualify under the Means Test. The means test is a formula that takes into account your house payments and other secured debts along with certain amounts fixed by IRS Standards to determine whether you qualify. Surprisingly, many individuals qualify for Chapter 7 under the means test who have incomes that exceed the state median income. The means test allows for deductions for child support, day care, and charitable contributions.
Credit Counseling
No one may file bankruptcy without first having received a credit counseling interview from a credit counselor approved by the United States Trustee. The interview is simple and takes about 30 minutes, and is usually done over the phone or internet. The credit counseling agency will send you a certificate of completion which is filed with your bankruptcy. Your bankruptcy cannot be filed without one.
Financial Management Course
Additionally, the law requires that each individual who files bankruptcy receive instruction in financial management in order to receive a bankruptcy discharge and successfully complete their bankruptcy. This, once again, is usually done over the phone or internet, and you will receive a certificate of completion which must be filed with the Bankruptcy Court. The purpose of this requirement is to educate you on good money management.
Are Credit Cards Still Dischargeable?
YES. Many collection agencies have been telling people that they may no longer be discharged from these types of debts, but this is false. Congress did change some time periods involved, but by and large, credit card debt may still be discharged.
Other Changes
Congress has placed limits on the value of homesteads of people who have moved from one state to another state in the past 2 years. Some other benefits of the exemption statutes also have limits for those who have moved from one state to another.
