Bankruptcy Abuse Prevention and Consumer Protection Act
Bankruptcy Abuse Prevention and Consumer Protection Act
Recent changes in bankruptcy laws have made it more difficult for consumers to file for Chapter 7 bankruptcy protection. In some cases, a Chapter 11 or Chapter 13 may be the only bankruptcy options available.
Here are the most significant changes that may impact your eligibility to file for Chapter 7:
The Means Test
The Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) introduced a “means test” to determine if a person is financially eligible to file for Chapter 7:
- If your income is less than the median income in your state, you are automatically eligible to file for Chapter 7 bankruptcy protection.
- If your income is greater than the median income in your state, then a test is applied to determine if your “disposable income” (income minus allowable expenses) is excessive:
- If your projected disposable income for the next 5 years is greater than $100 per month, you do not qualify to file for Chapter 7 bankruptcy, unless step 2 does not apply.
- If your disposable income for the next five years is greater than 25% of the unsecured debts you want to discharge, or is greater than $10,000, you do not qualify to file for Chapter 7.
If you can show “special circumstances”, you may still be able to file even if you fail the means test.
Time Restrictions
Under BAPCPA, you cannot file for Chapter 7 bankruptcy protection if you have received a Chapter 7 discharge in the previous 8 years.
Mandatory Credit Management
You will be required to attend a credit and financial management course provided by an approved credit counselor. In many cases, this course can be taken entirely online.
When you’re ready to end your bill problems once and for all, contact me using the form on the left side of this page or call 1-212-239-3800 to set up a free, no-obligation meeting to talk about how I can help you.
