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2005 Reform Act

The Bankruptcy Abuse Prevention and Consumer Protection Act
The process of filing for bankruptcy was once, for many, considered an easy way out of financial debt. While many individuals had legitimate reasons for filing, others simply used bankruptcy as a way to crawl out of debt after abusing their lines of credit. Students would take out loans and then file for bankruptcy after college in order to start their working lives with a clean slate.
In April of 2005, President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) into law. The new laws were designed to prevent abuse of the bankruptcy system while opening up the options available to those who were in debt. The following are some of the changes the new laws implemented.
Bankruptcy Petitions Dismissed Due to Abuse
In the past, individuals would max out credit cards and then file for bankruptcy, essentially obtaining goods and services for free. The new bankruptcy law makes it easier for the bankruptcy court to dismiss a petition if it can be proven that the individual or couple filing for bankruptcy intentionally abused their lines of credit.
The Chapter 7 Bankruptcy Means Test
The old bankruptcy laws made it very easy for anyone to file for Chapter 7 bankruptcy, essentially eliminating all financial obligations whether they had any means for payment or not. The new bankruptcy laws mandate that an individual must complete a means test to determine whether or not his income falls below the median income set for his state.
If your income after expenses falls below the median, you will be allowed to file for chapter 7 bankruptcy. If your income is higher, you may be required to create a full or partial repayment plan through a Chapter 13 filing instead.
Length of Time between Bankruptcy Filings
Consumers who file for bankruptcy and receive a discharge must wait a specified period of time before being allowed to file for bankruptcy again. Under the old laws, individuals only needed to wait 6 years in between Chapter 7 filings. The new laws extended the waiting period to 8 years.
Credit Counseling Requirements
The Bankruptcy Abuse Prevention and Consumer Protection Act added legislation requiring individuals filing for bankruptcy to complete credit counseling courses. Individuals who wish to file must complete a pre-bankruptcy credit counseling course before filing for bankruptcy and must submit a certificate of completion with their petitions. After the petitions are filed they must complete a pre-discharge credit counseling course in order to prove they have received advice regarding money management, budgeting and the proper use of credit.
The BAPCPA laws passed in 2005 made many additional changes, including to the way creditors are notified of bankruptcy proceedings, to the way filers can claim exemptions, and to the fees charged to file bankruptcy. Make sure you work closely with a knowledgeable bankruptcy attorney. He or she will be familiar with bankruptcy laws and changes and can walk you through the process as painlessly as possible.

The Bankruptcy Abuse Prevention and Consumer Protection Act
The process of filing for bankruptcy was once, for many, considered an easy way out of financial debt. While many individuals had legitimate reasons for filing, others simply used bankruptcy as a way to crawl out of debt after abusing their lines of credit. Students would take out loans and then file for bankruptcy after college in order to start their working lives with a clean slate.
In April of 2005, President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) into law. The new laws were designed to prevent abuse of the bankruptcy system while opening up the options available to those who were in debt. The following are some of the changes the new laws implemented.
Bankruptcy Petitions Dismissed Due to Abuse
In the past, individuals would max out credit cards and then file for bankruptcy, essentially obtaining goods and services for free. The new bankruptcy law makes it easier for the bankruptcy court to dismiss a petition if it can be proven that the individual or couple filing for bankruptcy intentionally abused their lines of credit.
The Chapter 7 Bankruptcy Means Test
The old bankruptcy laws made it very easy for anyone to file for Chapter 7 bankruptcy, essentially eliminating all financial obligations whether they had any means for payment or not. The new bankruptcy laws mandate that an individual must complete a means test to determine whether or not his income falls below the median income set for his state.
If your income after expenses falls below the median, you will be allowed to file for chapter 7 bankruptcy. If your income is higher, you may be required to create a full or partial repayment plan through a Chapter 13 filing instead.
Length of Time between Bankruptcy Filings
Consumers who file for bankruptcy and receive a discharge must wait a specified period of time before being allowed to file for bankruptcy again. Under the old laws, individuals only needed to wait 6 years in between Chapter 7 filings. The new laws extended the waiting period to 8 years.
Credit Counseling Requirements
The Bankruptcy Abuse Prevention and Consumer Protection Act added legislation requiring individuals filing for bankruptcy to complete credit counseling courses. Individuals who wish to file must complete a pre-bankruptcy credit counseling course before filing for bankruptcy and must submit a certificate of completion with their petitions. After the petitions are filed they must complete a pre-discharge credit counseling course in order to prove they have received advice regarding money management, budgeting and the proper use of credit.
The BAPCPA laws passed in 2005 made many additional changes, including to the way creditors are notified of bankruptcy proceedings, to the way filers can claim exemptions, and to the fees charged to file bankruptcy. Make sure you work closely with a knowledgeable bankruptcy attorney. He or she will be familiar with bankruptcy laws and changes and can walk you through the process as painlessly as possible.