New bankruptcy law will still allow debtors to obtain a fresh start
The Bankruptcy Abuse Prevention and Consumer Prevention Act (BAPCA) that
took effect October 17, 2005, has added a few new twists to filing bankruptcy. However,
those who deserve a fresh start will still be able to get relief from their debts.
If you have high medical bills, lost your job, are going through a divorce, or have
other sorts of financial problems, you can still start over.
Here’s what you can expect:
Credit Counseling requirement
You will have to go to an approved credit counseling service within 180 days
before filing a Chapter 7 or 13 for a “briefing,” and after the filing you will have to attend
financial education classes (again given by an approved agency) following filing. The
certificate stating you have attended the counseling will have to be files at the Bankruptcy
Paul Atkinson, president of Consumer Credit Counseling Services of Buffalo,
says the fees at his agency will be $50 for the briefing and $50 for the financial
education. Married couples can attend at the same time and each get a certificate, but the
fee will remain at $50 for the couple for each section of the counseling.
Current Monthly Income documentation
For a Chapter 7, you will have to provide your attorney with your two previous
years of tax returns and 60 days of recent pay stubs. In a Chapter 13, your attorney will
need the previous four years of tax returns and 60 days of pay stubs.
Your Current monthly income (CMI) will be based on your income over the past
The `Means Test’
Only 10 to 15 percent of debtors will have to undergo the “Means Test.”
If your income is over the median income (in New York this is $39,463 for a
single person; $48,496 for a family of two; $57,430 for three; $67,564 for four; and
$73,864 for five) you will have to undergo the “means test.”
There are certain expenses allowed (for basic needs such as rent or a mortgage,
food, transportation, etc.) th