What Is The Bankruptcy Abuse Prevention and Consumer Protection Act?

On April 20, 2005, President Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which instituted substantial changes to the Bankruptcy Code. Most provisions of BAPCPA became effective in October 2005. BAPCPA’s provisions make it more difficult to file for Chapter 7 and impose many additional requirements on debtors in an effort to exclude debtors who can pay their creditors from Chapter 7. Under the amendments to Section 707(b), a bankruptcy case should be dismissed if the debtor is found to be “abusing” Chapter 7 relief. Prior to the BAPCPA, the word “substantially” was included immediately before “abuse” in the test.

What is Chapter 7 Bankruptcy?

Also known as “liquidation” or “clean slate”, Chapter 7 lets you discharge (wipe-out) most unsecured debt, such as credit card balances, medical bills, and even certain taxes. Some debts, such as child support, student loans, and recent taxes cannot be discharged through Chapter 7. Typically, people who file for Chapter 7 have no assets to protect and earn below the median income.

Chapter 7 Means Test

One of the most significant aspects of the new bankruptcy laws is the means test for individuals with primarily consumer debts who wish to file for Chapter 7. Under §108(8) of the Bankruptcy Code, a consumer debt is “primarily for a personal, family, or household purpose.” If the debtor is above the threshold established by the means test, his or her Chapter 7 petition may be dismissed, or the case could be converted to a filing under Chapters 11 or 13, if the debtor consents.

If the debtor’s current monthly income is less than the state median, the debtor automatically qualifies for Chapter 7. If the debtor’s current monthly income is more than the state median income, the means test will be applied to determine if filing for Chapter 7 is presumptively abusive.

Does filing for bankruptcy protection stop creditors from calling me or contacting me directly?

Yes, immediately. After we file your bankruptcy, your creditors may only contact us. Once they have been notified, creditors are prohibited from contacting you at home, at work, or by cell phone. Your creditors will also be prohibited from contacting your friends and family members.

In addition, filing for bankruptcy will halt wage garnishments, end lawsuits targeting personal property, stop repossessions and foreclosures, and potentially even return previously garnished wages or repossessed property to you.

Will filing for bankruptcy save my home from foreclosure even if I have waited until the day before the sale?
Yes. We can stop the foreclosure sale right up until the sale begins. However, we encourage you not to wait until the last minute as it can increase the risk of unforeseen circumstances that may prevent you from filing.

Can I file Chapter 7 if I have assets I want to keep?
Yes, in certain circumstances. This is called “reaffirming” a debt. In the Chapter 7 process, you may be able to reaffirm secured debts, such as a car loan or mortgage, if you are current on your payments and continue to make your regular monthly payments. You can also choose to surrender these assets, in which case any past due balances will be discharged in your settlement.

How will filing for bankruptcy affect my credit score?
Unfortunately, the damage is already done. Once you have any debt that is over 3 months (90 days) past due, a vehicle that has been repossessed, or a home in foreclosure, your credit score has already been damaged. Filing a Chapter 7 or Chapter 13 and successfully meeting all requirements and repayment obligations of the case are the first steps to rebuilding your credit rating.

How soon will I be able to re-establish my credit?
A lot sooner than you might think. While a bankruptcy can remain on your credit report for 7 – 10 years, many bankruptcy filers are able to qualify for auto loans, credit cards, or buy homes shortly after filing. You may simply have to pay a higher interest rate than someone who has unblemished credit.

What is credit counseling? How do I enroll?
As part of the new Bankruptcy Law passed in April 2005, clients must participate in credit counseling sessions as a provision of their bankruptcy application. In some cases, participants may even discover that there are other reasonable ways to pay off their obligations and avoid filing for bankruptcy altogether. Enrolling is easy – we offer counseling right here in our office.

How much will it cost to get started?
Initial consultation with Attorney Melvyn Burrow is free.

How many times will I have to go to court?
Most cases require only 2 appearances. You will be accompanied and represented at both hearings by your attorney.

What is a bankruptcy mill?
A “mill” is a large firm that files many cases. These mills are notorious for charging additional fees at every step of the case. These types of firms have a factory approach to the entire process. You become little more than a case number to them. Clients often do not get the personal attention they deserve from their attorney. Cases are often handled primarily by assistants, rather than by the attorneys themselves.

Attorney Melvyn Burrow agency is NOT a bankruptcy mill. You will be treated with the utmost respect and dignity. We set our standards for customer service very high and demand that every member of our staff adhere to those standards. We never charge additional fees for your legal needs during the life of your case.

Duties of the Trustee

Under Sections 704(a)(10) and (c)(10), the trustee must advise a domestic support creditor in writing of the existence of and right to use support enforcement and collection agencies. The trustee must also provide notice of such claims to those agencies. The trustee in a Chapter 7 case must ensure that the final reports are uniform.

How often will I meet with my attorney?

We do not restrict your right to schedule an appointment with your attorney. Your attorney fee is a flat rate fee, meaning that you will never be charged additional fees for any of the services rendered on behalf of your case. This is a very important question to ask any attorney you consider hiring. Many firms charge a base fee with additional charges assessed for each step of your case.