New Bankruptcy Law Makes It More Difficult To Go Bankrupt
Disclaimer: The following article meant for reference only, and is not intended to be legal advice. Be sure to consult a lawyer for a full explanation.
The Bankruptcy Abuse Prevention and Consumer Protection Act was became effective on October 17, 2005 (except for a few provisions). This amendment to the Bankruptcy Code is a major revision of the 1978 Bankruptcy Code and deals mainly with consumer bankruptcy. It was passed in response to rising bankruptcy filings and is based on a concept of increased personal responsibility. This article offers a very brief explanation of the means test that is designed to dump some debtors out of Chapter 7 and into Chapter 13:
Most debtors would of course prefer to discharge their debts under Chapter 7 rather than pay into Chapter 13. For debtors with the ability to pay, however, this will not be nearly as automatic as before. Under the previous version of the Bankruptcy Code, a finding of “substantial abuse” had to be made before a debtor was barred from Chapter 7 relief. Under the new law, this standard is reduced to “abuse” (one act of...
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