The 2005 Bankruptcy Act brought with it changes to how debtors qualify for Chapter 7 bankruptcy, among other things. As a debtor or creditor, it is important to understand the implications of the act. Here is a quick rundown of what you need to know about the 2005 Bankruptcy Act.
2005 Bankruptcy Act
Given its full name, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was a reform of bankruptcy processes. The act was passed by Congress and subsequently signed into law under President Bush in 2005. The act made changes to how debtors show they are eligible for bankruptcy.
The 2005 Bankruptcy Act states debtors wishing to use Chapter 7 bankruptcy are required to pass a means test. This test considers the debtor’s average gross income in the six calendar months prior to filing, compared to the median income for the state. The means test looks at whether the debtor can afford to pay creditors based on income. If the debtor’s income is lower than the median income for the state, he or she likely is eligible for Chapter 7 bankruptcy under The 2005 Bankruptcy Act. However, other factors may be considered, as well.
Debtors with income greater than the median for the state might not qualify for Chapter 7 bankruptcy, and will likely proceed instead to Chapter 13 bankruptcy. The means test makes a determination based a calculation, which takes monthly income, expenses and the amount of debt into consideration.
As a condition of filing for bankruptcy, individual debtors must go through credit counseling in a program that is approved by the government. Most individuals are also required to enter a financial management program before any debt can be discharged under The 2005 Bankruptcy Act. The U.S. Trustee Program provides further information on credit counseling and debtor education, including a list of approved programs.
One of the negative impacts on debtors from The 2005 Bankruptcy Act is that the prevention of eviction actions was removed. If you are filing for bankruptcy, an automatic stay no longer applies to these actions, which means if you live in a rented property, you may still face eviction if your rent is not up to date, unless certain conditions are met, which is often difficult to do.
Bankruptcy Lawyer, Georgia
To fully understand how The 2005 Bankruptcy Act applies to you, reach out to the experienced bankruptcy lawyers from H. Lehman Franklin P.C. We can provide further guidance on applying for bankruptcy in the state of Georgia. Call today to speak to a qualified and experienced bankruptcy lawyer. Our goal is to help clients navigate the complex process of filing for bankruptcy. You can reach our team on 912-764-9616, or you can email our offices at firstname.lastname@example.org for a call back.