Bankruptcy Questions Regarding BAPCPA: A Quick Guide
Though the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 only amended existing federal bankruptcy statutes, it is commonly thought of as an entirely new set of bankruptcy laws. Though this is technically not true, the impact of BAPCPA is great enough that many of its provisions should be addressed for the sake of anyone who has bankruptcy questions.
The most important change in bankruptcy law brought about by BAPCPA is perhaps a restriction on the number of bankruptcy filings any individual can make within a set period of time. Currently, bankruptcy protection can only be granted once within an eight year period. This change was in response to what many felt was a growing number of individuals who habitually abused the bankruptcy system and declared insolvency whenever they incurred any debt.
Another noticeable change in bankruptcy law was the creation of a so-called 'means test' that is applied to every claim. As the name implies, the means test seeks to discover whether or not someone has the capability to pay off their debts. If they do not, they may proceed with a Chapter 7 filing. However, if the test concludes that someone does have sufficient income to repay their creditors, they may re-file their claim under Chapter 13.
As always, the goal of bankruptcy law is not simply to help forgive individual debts or extract payment for them. For this reason, BAPCPA also requires that anyone who declares bankruptcy also undergo credit counseling from a pre-approved credit counseling agency. This is because it is in the best interest of everyone involved, including debtors, creditors, and the government, if bankruptcy filings can be avoided in the future. The goal of bankruptcy, after all, is to help people get 'back on their feet' and rehabilitate their financial situations. To this end counseling, like other services and forms of help, is an important part of protecting an individual or family's finances.
There are, of course, numerous other changes to federal bankruptcy law that have occurred as a result of the BAPCPA amendments. Illinois bankruptcy-related laws have gradually changed over the years, as well. The experienced professionals at our practice, however, are completely versed with and experienced in dealing with cases that have been affected by these changes. It's for this reason that we're happy to consult with anyone who has any questions regarding these and other aspects of bankruptcy law.