Last month, on October 17th, the bankruptcy law turned 8. In 2005, the government passed the Bankruptcy Abuse and Consumer Protection Act: BAPCPA. It became the bankruptcy law on October 17, 2005.
So, on October 17, 2013 that law was eight (8) years old.
Why do we care? The new law carefully defines how long someone must wait after filing a bankruptcy until another one can be filed. The longest period is between filing multiple Chapter 7 bankruptcies: 8 years. The time is calculated from filing date to filing date; so even if the bankruptcy was active for a while, that time is part of the 8 year waiting period.
In September and early October 2005, knowing the new law was about to go into effect, a lot of people filed for bankruptcy relief. So, the eight year waiting period between Chapter 7 filings has passed for all of those people.
There are many predictions that a lot of the people who filed in 2005 will file again in the next few months now that they can.
For most, the process will be a little more complicated and a little more expensive than it was 8 years ago, but they will get the same result: a discharge of unsecured non-priority debts.
There are several new parts to bankruptcy that didn’t exist before October 17, 2005. Most notably:
1. The Means Test – a new form designed to determine if one qualifies for a Chapter 7 bankruptcy;
2. Mandatory credit counseling. The law now requires a debtor to take two classes; one before filing a bankruptcy and one after;
3. New laws limiting the property that will be exempt in the bankruptcy; and
4. More government forms that must be read, signed, and, in some cases, filled out.
But, fortunately, the basic structure of bankruptcy still exists and the honest debtor can still get a fresh start and discharge his or her debts.
image credit: sharefaith.com
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Last modified: November 5, 2013