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Pursuant to 11
U.S.C. §528, "We are a debt relief agency. We help people file for
bankruptcy relief under the Bankruptcy Code."
On October 17,
2005, the Bankruptcy Abuse Prevention & Consumer Protection Act
took full effect.
Consumers must
receive a counseling certificate from a non-profit agency approved
by the US Trustee before they can file Chapter 7 or Chapter 13
bankruptcy. This counseling session may take place on the
telephone or over the internet. The counseling session must take place
within 180 days of bankruptcy case filing. The counseling agency
will provide the consumer with a certificate and a copy an any
debt repayment plan developed by the credit counseling agency. The
certificate will be filed with the bankruptcy court along with the
petition scheduled in Chapter 7 and Chapter 13 cases.
Effective October
17, 2005 the new bankruptcy law requires that consumers who have
household income greater than the median income for their
household size, be subject to a "means test." Estimates are that
approximately 10 to 15 percent of consumers will now be subject to
"means testing." The means test will make it harder for those 10
to 15 percent of consumers to be eligible for Chapter 7 relief.
Those consumers will likely need to seek relief from their debts
under Chapter 13 of the Bankruptcy Code. Both Chapter 7 and
Chapter 13 provide consumers with relief from their debt and both stop creditors
from pursuing their collection remedies available under state law.
The actual "means test" involves a household budget analysis. The
consumer monthly living expenses are determined by using a
combination of objective IRS standards and actual subjective
costs. Monthly income will be the average income the consumer
received from all sources within 6 months of filing Chapter 7 or
Chapter 13 bankruptcy.
The new bankruptcy
law adds several more documents that consumers must file with
their petition schedules in Chapter 7 and Chapter 13 cases. The
documents include a credit counseling certificate, a debt relief
agency disclosure document, copies of pay stubs received within 60
days of filing, most recent tax returns, statements showing how
the consumers' new monthly income was calculated, documents disclosing any
changes to their income during the past year and a photo ID or
other identifying information as requested by the trustee or US
trustee. Failure to produce these documents within 45 days of
filing for bankruptcy will result in the automatic dismissal of
the case.
Consumers who file
Chapter 7 or Chapter 13 bankruptcy will now be subject to random
audits. The audit will be used to determine the accuracy,
veracity, and completeness of petitions, schedules and other
information provided by a consumer bankruptcy debtor. The
bankruptcy discharge can be revoked if the debtor fails to
cooperate with the auditor or fails to explain satisfactorily any
material misstatement.
The new bankruptcy
legislation requires consumers in Chapter 7 and Chapter 13 cases
to complete "an instructional course concerning personal financial
management." This education requirement must be completed after
the bankruptcy case is filed but before the discharge of debt is
ordered by the court. This education requirement is in addition to
the pre-filing credit counseling requirement.
What bankruptcy might be right for you? Follow the links at the top of
the screen, or you can call or
email
us
to find out which is right for you. |
