The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
Savvy consumers might remember former President George W. Bush’s enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act on April 20, 2005. The “New Bankruptcy Law,” as it is often called, exists to prevent bankruptcy fraud.
The Bankruptcy Law’s biggest changes were tougher restrictions surrounding filing for Chapter 7. The Act implemented a new “means test” to determine whether a debtor is eligible for Chapter 7. If your income is above your state’s median income, you might not qualify for this type of bankruptcy. Debtors ineligible for Chapter 7 liquidation may file for Chapter 13 reorganization instead.
Random audits and targeted audits are now performed to determine whether a debtor’s bankruptcy documents are accurate and honest. Certain entities have been certified to provide mandatory credit counseling to debtors before bankruptcy proceedings can begin. Certain entities have also been certified to provide the financial education an individual must receive before discharging debts.
While some people scoffed at the reform act, others welcomed the crackdown on bankruptcy fraud. Bankruptcy fraud is a federal crime, which carries stiff penalties such as fines, probation, jail time and/or restitution payment. To avoid inadvertent bankruptcy fraud, work closely with a bankruptcy attorney in Orange County.
Bankruptcy fraud includes filing false documents, lying about your income, concealing assets and property, hiding liabilities and other deceitful tactics. When filing for bankruptcy in Orange County, CA be truthful and honest from the very beginning. Do not risk your family and your future just to save a bit of money.