The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BACPA) changed many aspects of how bankruptcy works. It created the means test, tax-based proof of income requirements, credit and debt counseling requirements, and curtailed some of the powers of the automatic stay.
The Means Test is a calculation of income based on household income and household size. If your income is higher than your state’s median for your household size, you will fail the means test. That doesn’t mean you can’t file for bankruptcy at all, but it does mean you will be limited to Chapter 13 bankruptcy, which is a payment plan, rather than Chapter 7 bankruptcy, which is total liquidation bankruptcy and debt discharge.
The BAPCPA also created the requirement that you must show proof of your income using tax returns from the past year. This means that bankruptcy protection will be more difficult to obtain for those who are behind on their taxes. You can still file, however, you will be required to get current on your taxes before your case can proceed.
Those filing for bankruptcy protection also have to complete credit counseling and debtor education courses in order to receive a discharge of debt. These courses are inexpensive, and the cost can be waived for those who qualify. They only last about an hour, and can be completed via phone, online or in person. But you must take the courses from a government-approved program and show certificates for completing each one before you can receive a discharge of your debt.
Finally, the BAPCPA eliminated some protections from the automatic stay granted in bankruptcy. The automatic stay halts collections activity during the course of your bankruptcy case, including disconnection of vital services like power or water, foreclosure, or repossession of a vehicle. In 2005, some of these were eliminated, including protection from evictions, driver’s license suspension, legal actions for child support and divorce proceedings.
Over the past 30 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.
About the Author
Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More