What changes were brought about by the Bankruptcy Act of 2005?

On October 17, 2005, bankruptcy code took a new shape of existence. While the amendment will not necessarily prevent the debtor from being eligible for bankruptcy for sure but it is essential to be acquainted with the new provisions as the eligibility criteria got very tougher for some people to file bankruptcy. The new bankruptcy law shaped a number of additional requirements for filing bankruptcy.

The requirements are as follows:

Requirement of Counseling: After the amendment of 2005, bankruptcy law in the United States entail to the most applicants to be present at pre-filing credit analysis and counseling in an administrative financial course. They also must participate in a government-approved financial management education program after the ending of the court proceedings and prior to any debt to be discharged.

The "means test" requirement for Chapter 7 filing: If the debtor currently desire to file for Chapter 7 bankruptcy has to surpass a "means test" to qualify. This test is pertaining to the debtor’s current monthly income which shall be more than the median income of the debtor’s state. If the debtor’s income turns out to be more than the median income, the bankruptcy court judge aspects corresponding to the debtor’s monthly income, his/her (debtor’s)expenses, and the total amount of his/her debt. The option left with the individuals on non-qualifying People who do not qualify for Chapter 7 may still qualify for Chapter 13 bankruptcy filing.

Reduction of protection: Bankruptcy law has conventionally endowed with some shield of protection known as "automatic stay" that automatically comes into effect as soon as the filed for bankruptcy. The 2005 changes purged out some of these protections, like preventing evictions, driver's license suspensions, child support actions, or divorce.

The complexity of different factors and mechanisms may perplex any debtor, so it is essential to talk with an erudite and veteran attorney about the requirements for qualifying through the bankruptcy filing requirement provisions. When we represent any debtor in connection with bankruptcy, we keep in our mind of the debt relief agency’s statutory obligations as defined by the Bankruptcy Code, 11 USC § 101(12A).

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