In 2005, former president George W. Bush signed into law a major reform of bankruptcy law. This reform, called the Bankruptcy Abuse Prevention and Consumer Protection Act, changed bankruptcy law in a variety of ways. In general, filing for bankruptcy became slightly more complicated due to the reform. The following are a few of the major changes you may want to consider during the filing process in Arizona, and our Phoenix bankruptcy lawyers can help you better understand how the following changes impact your individual situation.
Chapter 7 Eligibility Is More Stringent
After the president signed the BAPCPA into law in 2005, the financial requirements to qualify for Chapter 7 bankruptcy became stricter. The primary change has to do with level of income. If your income is at or above the median level for your region, you will be automatically rendered ineligible to file for Chapter 7.
Moreover, if upon examination of your finances, you are determined fiscally able to contribute $100 per month toward the removal of your existing debt, you will need to proceed as a Chapter 13 petitioner instead of Chapter 7. This is determined through the analysis of your income each month, your general expenses, and the sum of your debts.
You Will Be Required to Take Classes
Before you can file for bankruptcy in Phoenix, AZ, you will likely be required to take credit counseling classes in a government sanctioned program. During these sessions, you will need to supply information about your income and your debts for the examination of a counselor. The counselor will go over the information and assets, like whether there are viable alternatives to filing for bankruptcy in your case. If alternatives are found, it is up to you whether you will pursue them or continue with your bankruptcy.
After your bankruptcy has concluded, you will also be required to attend a financial management training course that will give you information on management of finances and tips to remain debt-free.
Up-to-date Taxes Are Mandatory
Before 2005, those who had not paid taxes recently were still considered eligible to file for bankruptcy. Today, you need to provide additional documentation that requires taxes be current to begin your petition for bankruptcy. Your federal and state income tax returns from the preceding year will need to be presented. If they are unavailable, don’t fret; by paying your past due taxes and bringing them up to date, you will still be able to file.
The “Automatic Stay” Covers Less
An automatic stay is an injunction that occurs as soon as you petition for bankruptcy. This stay will preclude your creditors from taking many actions against you. These stays held a bit more weight before the BAPCPA was enacted, but are still an extremely helpful feature of bankruptcy proceedings.
One of the major changes to automatic stays has to do with eviction. While automatic stays will still keep your home or other owned property from being foreclosed upon, it will no longer protect tenants against eviction. Therefore, if you are considering filing for bankruptcy and are currently behind on your rent, it may be wise to prioritize paying your landlord during your proceedings. Make sure your Phoenix bankruptcy lawyer is informed of any potential residential complications from the outset, and you should be able to avoid a major incident.
The best way to guard yourself against inaccuracy and ensure you are getting the representation you deserve is to work with a professional. As experienced bankruptcy attorneys in Phoenix, AZ, we spend our days keeping up with changing laws and advocating for those who would benefit from filing for bankruptcy. If you have questions, contact us. We want the process to be as convenient as possible for you, so our professionals are available to assist you seven days per week.