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2005 Changes to Personal Bankruptcy Law
The following changes are not intended to be inclusive but only to describe some of the more significant changes you should understand before considering bankruptcy under the revised law.
1 . Means Test
If an individual’s income, minus allowable living expense amounts (these amounts are determined by the IRS), is greater than indicated on the Means Test for his or her state, the debtor will be required to fulfill a five-year Chapter 13 repayment plan instead of being able to file for Chapter 7. On the anniversary date of the repayment plan, the individual must file a new statement of income and expenses. The Means Test status can only be overruled if the individual can show “special circumstances that justify additional expenses or adjustments of current monthly income.”
2 . Mandatory Credit Counseling
Individuals cannot qualify for bankruptcy unless, within 180 days of filing, they receive credit counseling from a nonprofit, approved agency. This counseling must include a budget analysis. The individual must then file a certificate from the credit counseling agency certifying the services have been provided and showing any debt repayment plan that was developed. FFEF is an example of such an agency.
3 . Mandatory Financial Education
The individual must complete approved personal financial manage- ment education before any debts can be discharged. If the individual fails to get this education, discharge of the debts can be denied.
4 . Automobiles
Chapter 13 plans allow a secured creditor to retain the lien on an auto- mobile until the entire debt is paid if the vehicle was purchased within 910 days of filing.
Things You Should Know About Bankruptcy 39