West Palm Beach bankruptcy attorney

What is BAPCPA?

The Bankruptcy Abuse Prevention and Consumer Protection Act, or BAPCPA, is a law that was passed in 2005. This law made significant changes in the process of bankruptcy and the way it works in the United States. The basic purpose of this law is to make it more difficult for consumers to bankrupt under Chapter 7. However, some of those consumers who do not qualify for bankruptcy under Chapter 7 can still use Chapter 13.

One of the ways in which this law makes bankruptcy more difficult under Chapter 7 is by mandating a means test before filing. This is meant to make it more difficult to have debts entirely forgiven and make debtors repay their debts. However, this has not been very effective. Approximately 85% of all debtors do not have to take this means test and most of the other 15% are able to pass the test.

In the past, Chapter 7 filers were presumed unable to pay off any portion of their debts. According to this Act, this presumption has been substituted with the means test. This test applies to any filer whose gross income is higher than the median income in their state. If your income is lower, you automatically qualify for bankruptcy under Chapter 7. If your income is higher than the median, you must calculate your disposable monthly income to determine your ability to make payments under Chapter 13.

Speak with a West Palm Beach Bankruptcy Attorney

If you are thinking of filing for bankruptcy, please contact the West Palm Beach bankruptcy attorneys of Eric N. Klein & Associates at 561.353.2800.