Bankruptcy Abuse Prevention and Consumer Protection Act

At the Tennessee law office of Mark T. Young, we prepare and file Chapter 7 bankruptcy petitions for individuals throughout Southeast Tennessee and North Georgia. Our dedication and attention to details enable us to file petitions effectively and efficiently. We are committed to helping individuals achieve debt relief.

Bankruptcy Abuse Prevention and Consumer Protection Act

Attorney Mark T. Young has more than 30 years of experience preparing and filing Chapter 7 petitions. His extensive experience and dedication to helping individuals live a debt-free life is demonstrated in the fact that he is a Certified as a specialist in Consumer Bankruptcy by the American Board of Certification consumer bankruptcy lawyer.

In April of 2005, President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which instituted substantial changes to the Bankruptcy Code. Most provisions of BAPCPA became effective in October 2005. In an effort to exclude from Chapter 7 relief those debtors deemed to have the ability to pay at least some of the debts that would otherwise be discharged in Chapter 7, BAPCPA tightened the eligibility requirements for Chapter 7 and broadened the court's power to dismiss Chapter 7 petitions for "abuse." If you are considering filing for Chapter 7 bankruptcy and have questions about whether you will qualify, contact Mark T. Young & Associates in Hixson, TN, today to schedule a consultation with a bankruptcy lawyer.

Chapter 7 Means Test

One of the most significant aspects of the new bankruptcy laws is the means test for individuals with primarily consumer debts who wish to file for Chapter 7. Under the Bankruptcy Code, a consumer debt is "primarily for a personal, family, or household purpose." If the debtor is above the threshold established by the means test, his or her Chapter 7 petition may be dismissed, or the case could be converted to a filing under Chapters 11 or 13, if the debtor consents.

If the debtor's current monthly income is less than the state median, the debtor automatically qualifies for Chapter 7. If the debtor's current monthly income is more than the state median income, the means test will be applied to determine if filing for Chapter 7 is presumptively abusive. This step is a bit tricky. If the debtor's projected disposable income, which is monthly income minus certain allowable expenses, over the next five years is less than $6,000 ($100/month), you are eligible to file under Chapter 7. However, if the debtor's current monthly income minus the allowable expenses and multiplied by 60 (the number of months for the next five years) is more than the lesser of (1) 25 percent of the debtor's non-priority unsecured claims in the case or $6,000, whichever is greater; or (2) $10,000, the court presumes that abuse exists. If this is the case, the debtor will not be allowed to file for Chapter 7 unless he or she can show special circumstances, such as a serious medical condition or being on active duty in the U.S. military, to the extent such special circumstances that justify additional expenses or adjustments of current monthly income for which there is no reasonable alternative."

Other requirements for the debtor

BAPCPA includes a number of additional requirements for a debtor seeking to file under Chapter 7. Individual debtors are now required to obtain an individual or group briefing from an approved nonprofit budget and credit counseling agency within 180 days of filing for bankruptcy. This briefing must, at a minimum, outline opportunities for available credit counseling and assist the debtor in performing a budget analysis. Another critical requirement is that prior to receiving a discharge, a Chapter 7 debtor must complete a personal financial management course. The Bankruptcy Code requires that debtors filing under either Chapter 7 or Chapter 13 provide a copy of their most recent tax return to the trustee before the meeting of creditors. The debtor must also provide a copy the tax return to any creditor that requests one. Finally, before a debtor submits documents to the court or a trustee, the debtor and his or her attorney must make a reasonable inquiry under the circumstances to verify that the information, legal arguments and factual contentions contained in such documents are not being presented for any improper purpose, are well-grounded in fact and are warranted by existing law.

Duties of the trustee

The trustee's duties were also expanded under BAPCPA. The trustee must advise a domestic support creditor in writing of the existence of and right to use support enforcement and collection agencies. The trustee must also provide notice of such claims to those agencies. If the debtor was serving as an administrator of an employee benefit plan at the time of filing, the trustee must perform the duties of an administrator. If a debtor is a health care business, the trustee must use "all reasonable and best efforts" to transfer that business's patients to another such business in the same physical area that provides substantially similar services with a reasonable quality of care.

Speak to a bankruptcy lawyer

Although BAPCPA has made it more difficult for individuals with consumer debt to file for Chapter 7 bankruptcy, it is still possible, and many debtors still qualify for Chapter 7 relief. An experienced bankruptcy attorney at Mark T. Young & Associates in Hixson, TN, can determine whether you qualify for Chapter 7 and help you navigate the requirements for filing.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

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