Summary of Significant Amendments to the Bankruptcy Code

Contained in BAPCPA 2005 -

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23 (April 20, 2005), providing for significant changes in Bankruptcy in the United States, was passed by the 109th United States Congress on April 14, and signed into law by President George W. Bush on April 20, 2005. Most provisions apply to cases commenced on or after October 17, 2005. The Act of Congress attempts to make it more difficult for consumers to erase debt by forcing more people to file under Chapter 13 rather than Chapter 7.

1. Mandatory Credit Counseling Before Filing

2. Bankruptcy Attorney as “Debt Relief Agency”

3. Stricter Eligibility for Chapter 7 Filing to Encourage Chapter 13.

4. Fewer Debts Discharged

5. Notice to Creditors Must be to Address Designated by Creditor

6. State Exemptions Limited

7. Tax Returns and Proof of Income Required

8. Quicker Confirmation of Chapter 13 Plans

9. Tighter Definition of Disposable Income under Chapter 13

10. Mandatory 5 year Chapter 13 Plan if Over Median Income

11. Chapter 13 “Cram Down” of Secured Loans is Limited.

12. Fewer "Automatic Stay" Protections for Filers

13. Chapter 13 A.P. Payments Start Without a Motion

14. New Protections for Unpaid Child Support and Alimony

15. Creditors Must Apply Payments as stated in Chapter 13 Plan

16. More Disclosures Required in a Reaffirmation Agreement

17. Mandatory Financial Management Education after Filing

18. Time Between Chapter 7 Filings Increased to 8 Years.

1. Mandatory Credit Counseling Before Filing

An individual must obtain a briefing from an accredited credit counseling

agency within 180-day period preceding filing the petition. This counseling may be telephonic or on internet. Briefing must outline the opportunities for available credit counseling and assist in performing a related budget analysis.

The briefing may be waived if residing in district where U.S. trustee has

determined that approved agencies are not reasonably able to provide counseling services.

U.S. Trustee must approve credit counseling agency.

Credit counseling may be waived for period of 30 days postpetition if debtor

requested but was unable to obtain counseling within 5 days of the filing date.

Additionally, the Court may, for cause, extend the deadline for an additional 15 days. Credit counseling is not required for individuals who are incapacitated, disabled, or on active military duty in a war zone.

The debtor must file with the court a certificate of the credit counseling agency

that provided the services describing the services provided, and a copy of the plan, if any, developed by the credit counseling agency. 11 U.S.C. § 111, 11 U.S.C. § 521(b)

2. Bankruptcy Attorney as “Debt

Anyone who provides bankruptcy assistance to a consumer debtor for

consideration is defined as a debt relief agency. Debt relief agencies must include a legend in all advertising in substantially the following form “We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”

Debt relief agencies must provide a § 527(b) notice within 3 days of providing

any assistance. Debt relief agencies may have to give the § 527(c) notice, but this probably only applies to bankruptcy petition preparers, not attorneys.

11 U.S.C. § 101(12A), 11 U.S.C. § 526, 11 U.S.C. § 527

3. Stricter Eligibility for Chapter 7 Filing to Encourage

More Filings under Chapter 13.

An individual with mostly consumer debts may be forced into filing a Chapter 13 if income is too high. This is a two part test. “Current Monthly Income” (CMI) is the average gross monthly income for the preceding six calendar months before filing. A filing on July 17 would use income from January 1 through June 30.

Income includes income from all sources, except Social Security and most

payments received by victims of war crimes and terrorism. Unemployment

compensation may also be excluded. The Median Income Test is done on Parts I, II, and III of Bankruptcy Form 22A (B22A) - If CMI times 12 is less than Median Family Income for the debtor’s state, as determined by the Census Bureau, the debtor qualifies for Chapter 7. If the debtor