Passed in 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was enacted to change current bankruptcy laws. This new law made it more difficult for people to file for Chapter 7 bankruptcy. It does not affect the difficulty of filing for Chapter 13 bankruptcy, since this type of bankruptcy retains the repayment of loans by the individual. It may however raise the price of payments you have to make after you file. Many provisions were set up in this new bankruptcy law that affected not only individuals, but businesses as well.
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In order to file for bankruptcy under this new legislation, you must undergo credit counseling. Credit counseling informs people of the many alternatives there are to bankruptcy. The hope for this provision is that people will realize that bankruptcy is not actually necessary. You may also have to take a means test. This kind of test is only applicable to those people who have a higher income than the state average. The income that shows up on the means test is also adjusted by expenses, if there are children, and other factors. A complete list of deductions is available for review in act itself. Certain property can also become "exempt" in bankruptcy, meaning it cannot be liquidated in order to pay creditors. Certain exemption rules have also now changed.
With BAPCPA, it is more expensive overall to file for bankruptcy. The average individual who is attempting to file for Chapter 7 bankruptcy will be charged between $1,400 and $2,500. There are exceptions to those individuals who live below the poverty line. The provisions set up in this act also give more slack to creditors which means more work and more money spent for the person attempting to file for bankruptcy. Attorneys are also responsible for validating all information provided by the individual that is filing, which takes longer and means a greater expense.
Many people who actually deserve to be able to file for bankruptcy may not be granted this right because of the stricter guidelines set up in BAPCPA. It is not impossible however, and if you believe that your bankruptcy claim was denied unjustly, then you have every right to seek legal help. Every person deserves to be informed of their rights, so any and all questions that you may have when you are facing bankruptcy can be directed to a lawyer who is skilled in this area of the law. Many people may be able to avoid Chapter 7 bankruptcy, in which case this new bankruptcy law will help inform them of those options. However, you may still be entitled and completely justified in your desire to file.
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