Obtaining accurate bankruptcy information is an important aspect of determining if filing bankruptcy is in your best interest. Major changes were made to the United States Bankruptcy Code when Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005.
One of the best sources of bankruptcy information is the U.S. Trustee Program; a division of the U.S. Department of Justice. The Trustee Program website provides comprehensive information about the federal bankruptcy system, along with an entire section devoted to BAPCPA.
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BAPCPA requires debtors to undergo the 'means' test to determine if they are financially able to repay a portion of their outstanding debts. This tool measures the debtor's income with their states' median income level. In the past, the majority of people filing for bankruptcy protection elected to file Chapter 7. BAPCPA implemented the 'means' test to prevent consumers from filing bankruptcy to avoid repayment of frivolous spending.
In most instances, debtors are now required to file Chapter 13 bankruptcy. With Chapter 13, debtors must reorganize their debt and submit a repayment plan to the court. Although Chapter 13 allows debtors to retain their assets, a significant amount of their disposable income must be contributed toward the repayment of debts.
Chapter 13 repayment plans typically extend from three to five years. During this time, debtors are unable to incur any new debt without approval from the court Trustee. If debtors are unable to adhere to their repayment plan they must contact their bankruptcy attorney. The lawyer will contact the Trustee or creditors and attempt to work out a plan.
If the Trustee or creditors are unwilling to compromise, they can petition the court and request the bankruptcy be dismissed. This can be exceptionally damaging to individuals who filed bankruptcy to save their home from foreclosure.
Unfortunately, most of the published bankruptcy information does not fully disclose the ramifications of failing out of bankruptcy. When bankruptcy payments are missed, the debtor fails out of bankruptcy and the mortgage lender can move forward with foreclosure proceedings.
Foreclosure status resumes where it left off when the debtor filed for bankruptcy protection. In some instances, foreclosure can commence in as few as three days. Therefore, it is imperative to stay on track. Otherwise, failing out of bankruptcy will cause you to lose your home and all the money invested in it.
Filing bankruptcy is complex and complicated. Although debtors can file for bankruptcy protection on their own, it is advised to retain the services of a bankruptcy lawyer. BAPCPA demands filing specific documents and complying with deadlines. One wrong form or missed deadline can cause a bankruptcy petition to be dismissed. Hiring a qualified lawyer will provide debtors with the best chance of having their bankruptcy petition approved.
There is no guarantee any bankruptcy filing will be granted through the court. Although every citizen of the United States has the right to file for bankruptcy protection, not all petitions are approved. Therefore, it is important to investigate bankruptcy alternatives such as debt consolidation, debt settlement, credit counseling and budgeting.
Learn more about BAPCPA, credit counseling, debtor education programs, the 'means' test and locate nationwide bankruptcy courts and credit counseling offices through the U.S. Trustee Program at www.usdoj.gov.
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