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BANKRUPTCY SERVICES
Attorney Charles Gravett has had extensive experience representing both Napa businesses and individuals through the bankruptcy process.
Changes in the bankruptcy laws in the recent past has made the filing and discharge of bankruptcy more complex. New criteria and regulations
must be met in order to qualify for a discharge of debt in bankruptcy for consumers and businesses.
SOME HIGHLIGHTS OF THE BANKRUPTCY CODE REVISION
The Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 (BAPCPA) enacted April 20, 2005),
was a law enacting several significant changes to the U.S.
Bankruptcy Code. It was passed by the 109th United States Congress
on April 14, 2005 and signed into law by President George W. Bush
on April 20, 2005. Most provisions of the act apply to cases filed
on or after October 17, 2005. Referred to colloquially as the "New
Bankruptcy Law", the Act of Congress attempts to, among other
things, make it more difficult for some consumers to file
bankruptcy under Chapter 7; some of these consumers may instead
utilize Chapter 13.
Prior to the BAPCPA Amendments,
debtors of all incomes could file for bankruptcy under Chapter 7.
BAPCPA restricted the number of debtors that could declare Chapter
7 bankruptcy. The act sets out a method to calculate a debtor's
income, and compares this amount to the median income of the
debtor's state. If the debtor's income is above the median income
amount of the debtor's state, the debtor is subject to a "means
test." Only debtors whose monthly income is higher than the median
income of their state, as calculated by the Code, are subject to
being found abusive under the code. Debtors whose whose income
falls below the median income figure may be in violation of the
means test, however no party is permitted to file a motion in
order to find abuse under certain provisions of the code. This
creates a means test "safe harbor" for debtors below the state's
median income figure.
Other noteworthy changes brought by
the 2005 BAPCPA amendments occurred when Congress amended a
section of the Bankruptcy Code to provide for the dismissal or
conversion of a Chapter 7 case upon a finding of “abuse” by an
individual debtor (or married couple) with “primarily consumer
debt.” The pre-BAPCPA language provided for dismissal of a chapter
7 case upon a finding of “substantial abuse.” Under the former
code, only the court or the United States trustee could bring a
motion to find abuse under the section. The 2005 amendments
removed these restrictions.
Another major change to the law
enacted by BAPCPA deals with eligibility. Section 109(h) provides
that a debtor will no longer be eligible to file under either
chapter 7 or chapter 13 unless within 180 days prior to filing the
debtor received an "individual or group briefing" from a nonprofit
budget and credit counseling agency approved by the United States
trustee or bankruptcy administrator.
The new legislation
also requires that all individual debtors in either chapter 7 or
chapter 13 complete an "instructional course concerning personal
financial management." If a chapter 7 debtor does not complete the
course, it constitutes grounds for denial of discharge pursuant to
the new code.
There are additional changes required by
BAPCPA concerning student loans, additional filing requirements
and fees, increased attorney liability and costs, increased
compliance requirements for small businesses and increased amount
of debt repayment under Chapter 13.
If you are
considering filing bankruptcy, it is critical to consult with a
knowledgeable attorney who can help you make the best decisions
for your situation in light of these new restrictions. |
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