New Bankruptcy Law Changes FAQ

Disclaimer: The below is only a partial list of information about the new bankruptcy laws. Also, everything below is offered with the disclaimer that the provisions of the current draft of the bill can change before it is signed into law. Also, I might just be plain wrong in my reading or interpretation. So do not rely on what I have written below. I think it is correct, but it could be incorrect. I make no warranties or guarantees as to its accuracy.

"When does the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 become law?"

Probably on or about April 2, 2005.

"When will it take effect?"

Three provisions will take effect immediately (see below).
The rest of the law will take effect 180 days after it is signed by the president.

"Which three provisions will take effect immediately?"

1. If you have owned your home less than 40 months, you can only protect $125,000 of equity in it.

2. If the court finds that you have transferred property with the intent to hinder, delay or defraud, you can not protect any portion of your home.

3. If criminal charges are pending against you, discharge of debts may be deferred.

"What other provisions are in the bill?"

This is only a partial list of a few salient features.

1. Attorneys must sign a statement that they have done “an investigation” and don’t know of any falsehood in your bankruptcy petition. Some feel this may require your attorney to pay for an asset check to be performed on you by a private investigator. That would add to the cost of filing bankruptcy.

2. If you make over the median income for your state (approx. $39,000/year in Texas), you can’t file a Chapter 7 unless you meet a strict means test (i.e. you have just enough income to buy basic food and shelter). In applying the means test, the average income over the past 6 months is used, regardless of present actual income.

So in all liklihood, you will have to a Chapter 13.

"I have more questions..."

Please contact us.