THE BANKRUPTCY ABUSE PREVENTION
CONSUMER PROTECTION ACT (BAPCPA) OF 2005
The Bankruptcy Abuse Prevention And Consumer Protection Act of 2005 established stricter criteria for filing Chapter 7 bankruptcy, but a debt can still typically be discharged in Chapter 7 if it is unsecured, which means there is no property securing the debt. Unsecured debts include, but are not limited to, credit card debt, medical bills and most personal loans. In contrast, a Chapter 13 bankruptcy case involves a three to five year repayment plan for your debts. To qualify for a Chapter 13 bankruptcy, you must have a regular source of income, have enough disposable income, and your debts may not exceed a certain amount. There is no income requirement to qualify for a Chapter 7 bankruptcy.
The new bankruptcy law created an income-based test for measuring a debtor’s ability to repay debts. Under the means test, debtors with insufficient income in proportion to their debts can still file a Chapter 7 bankruptcy, which erases your unsecured debts entirely under most circumstances. The means test compares the debtors excess monthly income to the amount of unsecured debt to determine how much a debtor could repay to creditors in a Chapter 13 bankruptcy. Because this calculation is hypothetical and does not necessarily reflect the debtors true financial condition, a debtor who appears to be able to repay the minimum portion of his debts but who, in reality, cannot, may be permitted to file under Chapter 7 bankruptcy. Unfortunately, the means test is more complicated than we can explain here.
The new bankruptcy law requires every debtor filing for protection under Chapter 7 or 13 bankruptcy to take a credit counseling course before filing and a financial management course after filing. These courses may be taken in person, online, or by phone. The credit counseling course takes approximately 1-hour to complete and the financial management course takes at least 2-hours to complete.
When you’re filing bankruptcy, it is critical to understand your legal rights. The attorneys at Bankruptcy Services of Arkansas & Oklahoma personally meet with every client for the initial consultation to determine the appropriate course of action with FREE consultations and offer affordable payment plans.
Bankruptcy Services Of Arkansas & Oklahoma focuses on Consumer and Business Bankruptcy Law under Chapter 7 of the U.S. Bankruptcy Code. We serve Northwest Arkansas and Eastern Oklahoma. Our law offices are conveniently located in Fayetteville, Arkansas, and Stilwell, Oklahoma.
To schedule a free and confidential strategic planning session with a bankruptcy attorney, please call Bankruptcy Services Of Arkansas & Oklahoma.
Affordable payment plans are available.