Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCA) of 2005: Part II

You probably have spent some time researching different bankruptcy attorneys and their informational web sites — and you probably keep coming across information about this new Bankruptcy reform: the Bankruptcy Abuse Prevention and Consumer Protection (BAPCA).

In 2005, Congress passed and President George W. Bush signed the reform, making this the most significant overhaul to bankruptcy laws and filings since the original bankruptcy code was enacted in 1978. The new law and provisions adds further stipulations and can be complicated, making an individual seeking relief through a Chapter 7 or Chapter 13 bankruptcy filing more difficult. However, if filing bankruptcy is the only option for you, there are ways to still qualify for either a Chapter 7 or Chapter 13 bankruptcy — and you can soon begin your fresh, second start on life.

In “BAPCA: Part I” information regarding the new credit counseling requirements was offered up: basically stating that there are now Credit Counseling Programs that are mandatory before anyone is eligible to qualify for filing a Chapter 7 or Chapter 13 bankruptcy. This update explores the:

New Limits to Chapter 7 Bankruptcy Eligibility
Under the new BAPCA reforms, there are certain limitations to who can or cannot file a Chapter 7 Bankruptcy (“liquidation”). There is a now a certain level of income that may prohibit eligibility from filing a Chapter 7 Bankruptcy.

The Bankruptcy Court looks at the debtor's current monthly income (usually looking at the prior six months) against the state's median for a family of similar size to the debtor's. Usually, if the filer is below the median, a Chapter 7 Bankruptcy can be filed.

If the income is above the median for the state they reside, the debtor may need to pass a "means test" for the court or switch to a Chapter 13 Bankruptcy. The Means Test further explores your financial situation, history and current