New Bankruptcy Laws 2005
Understanding new bankruptcy laws, Chapter 7 bans & Chapter 13 payments
A Chapter 7 case must be dismissed under new bankruptcy laws or converted to Chapter 13 if failing new tests below. Judges will no longer be allowed judicial discretion in many new circumstances, & creditors will be entitled to file motions and receive mandatory enforcement.
- Means Testing - qualification under § 704(b)(1) requires trustees file a report with the court indicating if a case fails means testing as provided under § 707(b). This report must be filed within 10 days of meeting with creditors. If failing in any of three ways described, new bankruptcy laws require that cases must be dismissed with limitation on re-filing.
- Median Income Testing - qualification under § 707(b)(7) income must be less than median income for state of residency as a prerequisite for filing Chapter 7 under new bankruptcy laws.
- Credit Counseling - qualification under § 109(h) under the new bankruptcy laws mandates credit counseling as an initial requirement during the 180 days preceding filing the petition, received from an approved nonprofit budget and credit counseling agency.
- Repeat Testing - § 727(a)(8) bans Chapter 7 for anyone who has previously received a discharge in the last 8 years, rather than 6 years under current code regulations.
- Document Testing - § 521(j) requires automatic dismissal after 45 days of filing if any documentation is missing or defective. Judges currently are allowed discretion and may allow supplementation.
Further elimination of federal debt relief by new bankruptcy laws
Other more stringent requirements under proposed new bankruptcy laws eliminate eligibility for consumers & increase protection for secured creditors. The IRS and state taxing authorities receive greater protection. Also, residency requirements are increased from 6 months to 2 years with caps on the value of homestead exemptions.