The New Bankruptcy Act WHAT’S NEW The Good News

• The good news is that bankruptcy, whether Chapter 7 or Chapter 13, is still the easiest and least expensive and most effective remedy for too much debt.
• The state legislature increased the amount of bankruptcy exemptions on June 20, 2005.
• 85% of all Americans who wish to file Chapter 7 still can.
• Chapter 13 is a more attractive option now.
  • The trustee’s fee is reduced to 3.5%.
  • Persons passing the means test are eligible for 36 month plans.
  • Persons passing the means test may be eligible for repayment of 0-10% of unsecured debts and secured debt.

Counseling

• Before you can file bankruptcy you must have a certificate stating that you have completed credit counseling from a company approved by the U.S. Trustee. This is referred to as “in counseling”
• We will arrange “in counseling” for you over the internet. We will walk you through this process.
• To complete your bankruptcy you must do credit education called “out counseling”. We will arrange out counseling over the internet. We will walk you through this process.

Means Test

• To be eligible for a Chapter 7 Bankruptcy (in which you discharge or get rid of unsecured debts), you must meet a “means test”. We determine this for you.
• Studies show that about 85% of persons filing bankruptcy will qualify for Chapter 7. If you fail the means test, you can do a Chapter 13 repayment plan in which you pay secured debt to the extent of the nature of the security and a percentage (70% or less) of unsecured debt.
• Chapter 13 stops interest on unsecured debt. This is particularly important on credit card debt.
• In Chapter 13 the interest rate on secured debt can be reduced to prime plus 1-3%. Except debt for purchase money security in an auto within 910 days or purchase money security interest in other property within one year.

Time Limitations

• The time between filing Chapter 7 has been increased to 8 years between filing dates.
• Time between discharges.
• Even if you are not time eligible to obtain a discharge under Chapter 13. We could file a 100% Chapter 13 plan and pay all creditors in full in order to prevent the sale of your home or other important property.

Eligibility Time for Discharge Under BAPCA of 2005

If you previously obtained a discharge in a Chapter _________	You must wait ________ years between filings	Before you are eligible for a discharge in a Chapter _________
Chapter 7, 11,	8 years	Chapter 7
Chapter 12, 13	6 years	Chapter 7
Chapter 7, 11, 12	4 years	Chapter 13
Chapter 13	2 years	Chapter 13

Income and Tax Refunds

• In determining income for means test exclude income from Social Security and income tax refunds. Include bonuses as income.
• The Chapter 13 Trustee no longer wants tax refunds.
• The Trustee’s payment rate is 3.5% of funds received.

Costs & Expenses

• The court cost for a Chapter 13 has increased to $274. The court cost has increased for Chapter 7 from $209 to $299.
• Credit counseling ($50), credit education ($50), a credit report ($50) are new required expenses in both Chapter 7 and Chapter 13.

Fees

• Bankruptcy procedures are more time consuming for lawyers and as a result attorney fees are up.