Since the mid-80s, the commercial world has changed considerably as digital consumerism streamlined the way we spend money in the US. To address issues with these unprecedented technological advances, the US government had to respond with new laws. When it comes to US bankruptcy, the Bankruptcy Code was amended in 2005 to protect consumers and eliminate several forms of perceived bankruptcy abuse. The skilled bankruptcy attorneys at Behm Law Group, Ltd. have practiced since long before 2005, and with our experience, we can help you navigate the process of filing for bankruptcy in Fairmont, MN.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) considerably changed the process of filing for bankruptcy relief.
BAPCPA and what came with it:
The most notable changes that came with the addition of the BAPCPA were the standards set in place to qualify for Chapter 7 bankruptcy. Prior to the BAPCPA, consumers with any income could qualify for Chapter 7 liquidation bankruptcy. Because of the rapidly fluctuating economy and credit payment systems, a lot of bankruptcy abuse came to light during the 80s, 90s, and early 2000s. In 2005, the BAPCPA established the Means Test, which prevented filers with net disposable incomes higher than the state median income from qualifying for Chapter 7. Other major changes made with the BAPCPA include lengthened waiting periods between bankruptcy petitions and the requirement of a credit counseling course that all people must take in order to qualify for bankruptcy relief. Find out more about the changes made with the BAPCPA here.
How it affects Chapter 7:
Because the BAPCPA established stricter requirements with the Means Test, waiting periods, and more, it made it much more difficult to qualify for Chapter 7 bankruptcy. If the courts find that a case is abusive to Chapter 7 code, the case will be dismissed or converted into another type of bankruptcy. The BAPCPA also limited the use of the automatic stay provisions of 11 U.S.C. Sec. 362 in most cases, the types of debts discharged, the types of liens a bankruptcy filer could avoid, homestead exemptions, and other exemptions bankruptcy filers could claim.
How it affects Chapter 13:
By making it more difficult to qualify for Chapter 7, the BAPCPA forced more bankruptcy filers to enter the process of filing for Chapter 13 bankruptcy. Expenses for the administration of a repayment plan under Chapter 13 are deducted in the Means Test and credit counseling is also required for Chapter 13 bankruptcy filers under the BAPCPA. The most significant change for debt reorganization was the increase in the amount of debt required to be repaid with Chapter 13.
Overall, the BAPCPA of 2005 significantly changed bankruptcy code. This act and many others have made today’s standards for bankruptcy more difficult to process without the help of a professional. Behm Law Group, Ltd. can help you work through bankruptcy with a skilled, experienced bankruptcy attorney in Fairmont, MN. Contact us at (507) 387-7200 for more information.