{"id":286900,"date":"2016-04-04T10:41:50","date_gmt":"2016-04-04T15:41:50","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/chapter-7\/checklist-of-key-changes.html"},"modified":"2023-12-23T14:58:00","modified_gmt":"2023-12-23T19:58:00","slug":"checklist-of-key-changes","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/chapter-7\/checklist-of-key-changes.html","title":{"rendered":"Bankruptcy Reform: Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)"},"content":{"rendered":"\n
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Bankruptcy Reform: Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)<\/h1>\n
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\n By Linda Sanabria, J.D.<\/a> | Legally reviewed by Susan Mills Richmond, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was passed by Congress and signed into law by President Bush in April 2005. Some reforms<\/a> included tightened eligibility requirements and an emphasis on consumer education<\/a>.<\/p>\r\n

Changes instituted by this law took effect on October 17, 2005. Below are some of the key changes that happened because of this bankruptcy law.<\/p>\r\n

Mandatory Credit Counseling Under the BAPCPA<\/h2>\r\n

You must take a credit counseling course<\/a> within 180 days before filing for bankruptcy and submitting your filing fee.<\/p>\r\n

Find more information on the credit counseling procedure before filing your bankruptcy petition from the U.S. Trustee Program<\/a>. This program can also provide you with a list of approved credit counseling agencies.<\/p>\r\n

The U.S. Trustee Program is a component of the Department of Justice. It’s responsible for overseeing the administration of bankruptcy cases. See Bankruptcy Credit Counseling<\/a> for more details.<\/p>\r\n

Stricter Eligibility for Chapter 7 Filing<\/h2>\r\n

Chapter 7 bankruptcy, also known as liquidation,<\/a> allows you to have some of your unsecured debts discharged. Under the BAPCPA, you must meet certain eligibility requirements under a means test<\/a> to file for Chapter 7 bankruptcy.<\/p>\r\n

Under the means test, generally, if your current monthly income is less than the median income in your state, you may file for Chapter 7. If not, you can’t file under Chapter 7\u2014you must file a Chapter 13 bankruptcy<\/a>.<\/p>\r\n

Tax Returns and Proof of Income Required<\/h2>\r\n

Under the 2005 bankruptcy law, those wishing to file bankruptcy under Chapter 7 or Chapter 13<\/a> must show proof of their disposable income. They can’t do this by providing federal tax returns from the last tax year.<\/p>\r\n

If a bankruptcy filer has not filed their required tax return<\/a> for the previous one or two tax years, they may have to do so before they can file bankruptcy. For example, if they were employed and required to file a tax return for that time period.<\/p>\r\n

More Filings Under Chapter 13<\/h2>\r\n

For those ineligible for filing under Chapter 7 based on the means test, the only bankruptcy option is to file under Chapter 13 (reorganization)<\/a> instead.<\/p>\r\n

There are a few major differences between these two types of bankruptcy, including how long each one stays on your credit report<\/a>. The main distinction is that the Chapter 13 debtor enters into a three to five-year repayment plan in which they must pay a certain amount of money to creditors. An expenses-to-income formula determines this payment plan.<\/p>\r\n

For more details, read about Chapter 7 vs. Chapter 13 Bankruptcy<\/a>.<\/p>\r\n

Fewer ‘Automatic Stay’ Protections for Filers<\/h2>\r\n

People who file for bankruptcy have traditionally been entitled to certain immediate protection from secured and unsecured creditors and others. This includes protection from:<\/p>\r\n