Bankruptcy Changes

New York City Bankruptcy Attorney: New Bankruptcy Laws

In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which was touted as a way to close loopholes in the bankruptcy laws and to make it more difficult for those who are facing overwhelming debt to seek relief under a Chapter 7 liquidation bankruptcy. In our experience, it made a difficult situation worse and did little to address the real issue: good people finding themselves drowning in debt.

Not surprisingly, the major supporters of the new bankruptcy laws are the same consumer lenders who raise credit card limits for clients already badly in debt and who charge crushing interest rates over 30%. We believe it is obvious who the new bankruptcy laws were intended to benefit — those who make their profits by helping keep Americans in debt.

This legislation was strongly opposed by respected bankruptcy attorneys like David B. Shaev, as well as by financial and economic experts, academics and consumer protection advocates nationwide. Call (866) 396-7610 or e-mail us for a free consultation to discuss your debt relief needs with an experienced attorney who understands the new bankruptcy laws.

The New Means Test: Meaningless and Unfair

The means test at the core of the BAPCPA legislation is supposed to ensure that those who fall below their state's median income level are not required to pay back their debts. In other words, those who do not have the means should not have to pay.

On the surface it is a good idea, but how does the means test works for our clients in New York City? The median income in the state of New York is just over $43,000. If you are facing a foreclosure in Brooklyn or back taxes and penalties in Queens, it is likely that your yearly income is significantly higher than the state average. We have felt from the beginning that these bankruptcy changes are unfair to our New York City clients with average income far in excess of the statewide average.

In writing the new bankruptcy laws, Congress took the English language and turned it on its head. In the new means test, current monthly income is defined as all sources of income received in the six months prior to the month bankruptcy is filed, divided by 6. It does not take into account current unemployment or significant loss of income, and in many cases is neither current nor does it reflect your real monthly average income.

To discuss your legal options for seeking debt relief under the new bankruptcy laws with a respected Manhattan attorney, contact the Law Office of David B. Shaev in the Empire State Building today to schedule a free initial consultation.