BANKRUPTCY ABUSE PREVENTION & CONSUMER PROTECTION ACT OF 2005 (BAPCPA)

You Can File for Bankruptcy and have All of your dischargeable debts Discharged in a Chapter - 7 Bankruptcy.

          Your can file bankruptcy under Chapter -7 of the Bankruptcy Code, because most cases will pass the "means test" as explained below. Even if your case fails the "means test" you may still have your debts discharged by having your attorney advocate that the specific facts and circumstances of your situation merits a discharge of your debts without any repayment to creditors, to rebut the presumption of abuse.

          Whenever possible, I will advocate for you to the bankruptcy court to ensure that you obtain the bankruptcy discharge that you deserve. Please call me for a Free Consultation.

          The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (known as "BAPCPA") requires debtors’ counsel to collect, review and file a substantial amount of documentation. This law requires your attorney to reasonably investigate the accuracy of what their clients tell them. BAPCPA requires debtors’ attorneys to know a lot more about them than they did under the old law.

The Following are a List of Changes under BAPCPA:

Proof of identification: Section 521 allows the U.S. Trustee to require debtors to produce proof of identification. This documentation may be anything that includes a photo of the debtor.

Proof of income from all sources: Section 521 requires debtors to disclose their current income and monthly net income. Section 101(10A) defines "current monthly income" as including all income received by the debtor over a six-month period ending on the last day of the month immediately preceding the bankruptcy filing. This disclosure includes income received by non-filing spouses unless the debtor submits a sworn statement that the spouses are separated. This form also includes the means test calculation in Chapter 7 cases and the disposable income calculation in Chapter 13 cases.

Copies of all payment advice or other evidence of payments received by the debtor from an employer within 60 days pre-petition: Section 521 requires proof of income to be filed with the court no later than 45 days post-petition. The debtor’s most recent pay stub may satisfy this requirement. If there is any discrepancy between the debtor’s incomes as stated on the pay stubs and as disclosed in other documents, the debtor must be able to provide an explanation..

Debtor’s checkbook and copies of bank statements issued with the past 90 days: Section 603 of BAPCPA calls on the U.S. Trustee to establish audit procedures with the intention of submitting approximately one out of every 250 petitions to a formal audit. Selected debtors will need to have copies of their recent bank statements in order to satisfy the trustee’s requests.

Proof of payment of domestic support obligations such as Child Support: Section 1325 requires debtors to be current with their support payments to confirm their plans and Section 1328 requires debtors to be current with their post confirmation payments in order to receive a discharge. In every case, debtors’ attorneys will want to see a copy of the order creating the obligation.

Anticipated salary increases: Section 521 requires debtors to disclose whether they anticipate receiving a salary increase within the year following their bankruptcy filing.

Mandatory credit counseling: before a debtor can file for bankruptcy, they must complete a class or counseling session that tells them what options are available to help them deal with the debt that they are carrying. They must also create a household budget before they are allowed to file for bankruptcy. All of this must be done within the 180 day period immediately before they file for bankruptcy.

Financial management instructional course: Before a debtor can receive their discharge, they must complete a course on managing their personal finances. The hope is that by learning where they went wrong, debtors can avoid getting into financial trouble again in the future. This course must be completed after they have filed for bankruptcy but before they receive their discharge.

Limit on Automatic Stay: The law limits the application of the stay or provides that it does not go into effect, in certain circumstances, where there are serial filings under circumstances that would indicate bad faith or abusive filings. The stay terminates after 30 days if there is a filing by an individual in Chapter 7, 11 or 13 (but not Chapter 12) within 1 year after the prior case (under any Chapter) was dismissed (except for a case refiled in another chapter after a dismissal of a Chapter 7 case based on the means test). A party in interest (including the debtor) may move to extend the stay and show that the filing is in good faith. A case is presumed to be in bad faith for this purpose if more than one case was pending in Chapters 7, 11 or 13 (again, not in Chapter 12) and at least one such case was dismissed for failure to file required documents without substantial excuse, to provide adequate protection or to complete a plan, and there is no showing that the debtor’s financial situation has changed so as to allow a final discharge or completion of a plan. If two or more cases under any Chapter were dismissed during the prior year, the automatic stay does not go into effect at all until the court so orders after a hearing and a demonstration that the filing was made in good faith. The same bad-faith factors noted above are also applicable to this determination. The law also provides that the stay will terminate if the debtor does not timely file (i.e., within 30 days after the petition date) its statement of intent with respect to property subject to a security interest and timely (i.e., within 30 days after the first date set for the §341 meeting) complies with the stated intention. The court may extend the stay upon the motion of the trustee if the property is of value to the estate and adequate protection is afforded to the creditor.

Debtor’s Statement of Intent: The Debtor must perform a §521 statement of intent as to secured property within 30 days after the date set for the first creditors' meeting. Failure to either redeem the property or reaffirm the debt within 45 days after the §341 meeting results in termination of the automatic stay (as noted above) and allows the creditor to exercise whatever remedies it has under applicable non-bankruptcy law, subject to a request by the trustee to extend the stay upon providing adequate protection to the creditor.

Superdischarge in Chapter 13 Reduced: Debts for trust fund taxes, taxes for which returns were never filed or filed late (within two years of the petition date), taxes for which the debtor made a fraudulent return or evaded taxes, fraud and false statements under §523(a)(2), unscheduled debt under §523(a)(3), defalcation by a fiduciary under §523(a)(4), domestic-support payments, student loans, drunk-driving injuries, criminal restitution, and fines and civil restitutions or damages rewarded for willful or malicious personal actions causing personal injury or death are now excepted from discharge.

Eviction Proceedings: The stay will not prevent or halt an eviction proceeding if the debtor failed to pay rent after filing.

Non-dischargeability of Student Loans Expanded: Student loan non-dischargeability is extended to for-profit and nongovernmental entities.

Dismissal for Failure to file Documents and Schedules: In addition to the list of creditors, schedules of assets and liabilities, income and expenses, debtors must provide, a certificate of credit counseling; evidence of payment from employers, if any, received 60 days before filing; statement of monthly net income and any anticipated increase in income of expenses after filing; tax returns or transcripts for the most recent tax year; tax returns filed during the case including tax returns for prior years that had not been filed when the cases began, and photo ID. Failure to provide the documents within 45 days after the petition has been filed can result in automatic dismissal of the case after the time period has passed.

Attorney Verification Required: Attorneys must make “reasonable inquiry to verify that the information contained” in petitions and schedules are “well grounded in fact.” “The signature of an attorney on the petition shall constitute a certification that the attorney has no knowledge after an inquiry that the information in the schedules filed with such petitions is incorrect”.

Attorney Notice Requirement: Attorneys must have the following statement in their advertising: We are a Federally Designated Debt Relief Agency under Federal Law and We Provide Legal Assistance to Consumers Seeking Relief Under the Bankruptcy Code.

Means Test for Chapter 7 Eligibility: The "means test" is an evaluation that compares your gross income with the IRS list of median living expenses for your local area, to determine whether you have the ability to repay a portion of the debts that you owe to creditors, and therefore should instead file a chapter 13 petition to repay a portion of your debts. However, even if you fail this means test your attorney can advocate on your behalf that your situation merits a discharge of your debts without any repayment to creditors. The trustee or any creditor can bring a motion to dismiss under §707(b) if the debtor’s income is greater than the state median income. Abuse is presumed if the debtor’s current monthly income (as determined by an average of the previous 6 months) less secured payments divided by 60, less priority debts divided by 60, less the allowed expenses permitted by the IRS, less certain other allowed expenses, is greater than $100 per month of a Chapter 13 plan. Debtors who meet this standard would be shifted to 5-year repayment plan in Chapter 13. If a debtor’s income falls below the state median, the court may still find abuse but the creditors do not have the standing to file the motion. In determining whether the median threshold has been reached, the law looks at the number of people in the debtor’s household (which the census bureau defines to be all the people occupying a dwelling unit) compared to census figures adjusted by the CPI. The presumption of abuse may be rebutted by demonstrating “special circumstances that justify additional expenses or adjustments of current monthly income.” This can be accomplished by an attorney advocating the specific facts and circumstances of your situation.

The following flowchart shows how the Means Test is applied to your case:

Jacob Silver, Attorney At Law

Office Address

1225 Franklin Avenue Suite - 325 Garden City, NY 11530

 

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(516) 374-1452

 

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(718) 797-4141

 

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