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TODAY IS THE NINTH ANNIVERSARY OF THE NEW BANKRUPTCY LAW WHAT HAS CHANGED.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),
took effect nine years ago today, on October 17,2005. This "New Bankruptcy Law" (lawyers call something "new"
until
something newer comes along) was finally enacted after almost a decade of wending back and forth through Congress,
and was designed to make it more difficult to file a Chapter 7 [Liquidation] Bankruptcy case. The new law was intended to
"force" more debtors to file under Chapter 13 [Wage-Earner "reorganization" plan]
instead of Chapter
7.
The stated purpose of BAPCPA was to curb perceived abuses of then-existing bankruptcy law, in which some legislators
perceived that filing a Bankruptcy Petition under Chapter 7 of the old law
was "too easy" and was "abused"
by debtors. The abuses perceived by Congress were mostly anecdotal, with
mention of selected cases where a debtor was
able to keep certain assets which, in isolated circumstances, seemed to be unscrupulous. It is likely that many of these reported
"abuses" under existing law were simply cases where debtors applied the exemptionlaws of their state of residence
to their legal advantage --
similar to reducing one's taxes by careful tax planning -- not illegal at all; but when viewed
in a way detached from the whole story looks like an "abuse". The new
law did make it more difficult, and time-consuming, and costly, to file a Chapter 7 case -- requiring higher filing fees,
much more added documentation, two mandatory classes (one pre-filing, one post-filing), and the dreaded Means Test. In addition,
and perhaps the most-ominous part of the new law to many attorneys, the law requires an attorney's certification -- that
by signing the Petition as counsel of record -- the attorney certifies that they have conducted a reasonable investigation
of their clients' filings. BAPCPA also extend the time between allowed Chapter 7 discharges from six to eight years;
and bankruptcy filings are now subject to random, and not-so-random, audits. However, in my experience, the new law did
not preclude the vast majority of debtors who need to be in Chapter 7 from filing Chapter 7. Although the law has indeed
changed, and bankruptcy is in fact more difficult to file than before BAPCPA; filling bankruptcy still offers a safety
net or "last resort" to those people who find themselves overwhelmed by debt and in need of the protection of the
Bankruptcy Court. And, in comparison to most of the other alternatives available, bankruptcy is a relatively-inexpensive option.
Those who need to file, can still file. Les Kaufman of The Law Offices of Kaufman & Kaufman has been assisting debtors
file for bankruptcy protection since 1983. kaufman-kaufman.com714-550-9305 800-9KAUFMAN
TODAY IS THE NINTH ANNIVERSARY OF THE NEW BANKRUPTCY LAW WHAT HAS CHANGED.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),
took effect nine years ago today, on October 17,2005. This "New Bankruptcy Law" (lawyers call something "new"
until
something newer comes along) was finally enacted after almost a decade of wending back and forth through Congress,
and was designed to make it more difficult to file a Chapter 7 [Liquidation] Bankruptcy case. The new law was intended to
"force" more debtors to file under Chapter 13 [Wage-Earner "reorganization" plan]
instead of Chapter
7.
The stated purpose of BAPCPA was to curb perceived abuses of then-existing bankruptcy law, in which some legislators
perceived that filing a Bankruptcy Petition under Chapter 7 of the old law
was "too easy" and was "abused"
by debtors. The abuses perceived by Congress were mostly anecdotal, with
mention of selected cases where a debtor was
able to keep certain assets which, in isolated circumstances, seemed to be unscrupulous. It is likely that many of these reported
"abuses" under existing law were simply cases where debtors applied the exemptionlaws of their state of residence
to their legal advantage --
similar to reducing one's taxes by careful tax planning -- not illegal at all; but when viewed
in a way detached from the whole story looks like an "abuse". The new
law did make it more difficult, and time-consuming, and costly, to file a Chapter 7 case -- requiring higher filing fees,
much more added documentation, two mandatory classes (one pre-filing, one post-filing), and the dreaded Means Test. In addition,
and perhaps the most-ominous part of the new law to many attorneys, the law requires an attorney's certification -- that
by signing the Petition as counsel of record -- the attorney certifies that they have conducted a reasonable investigation
of their clients' filings. BAPCPA also extend the time between allowed Chapter 7 discharges from six to eight years;
and bankruptcy filings are now subject to random, and not-so-random, audits. However, in my experience, the new law did
not preclude the vast majority of debtors who need to be in Chapter 7 from filing Chapter 7. Although the law has indeed
changed, and bankruptcy is in fact more difficult to file than before BAPCPA; filling bankruptcy still offers a safety
net or "last resort" to those people who find themselves overwhelmed by debt and in need of the protection of the
Bankruptcy Court. And, in comparison to most of the other alternatives available, bankruptcy is a relatively-inexpensive option.
Those who need to file, can still file. Les Kaufman of The Law Offices of Kaufman & Kaufman has been assisting debtors
file for bankruptcy protection since 1983. kaufman-kaufman.com714-550-9305 800-9KAUFMAN
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