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Here are key provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, effective Oct. 17:


Published: Sat, September 24, 2005 @ 12:00 a.m.


Here are key provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, effective Oct. 17:
Means test for Chapter 7 eligibility: A debtor's income must be less than state median income. Income will be subjected to a formula that exempts expenses such as rent and food to determine whether you can pay 25 percent of your "nonpriority unsecured debt" such as credit card bills.
Mandatory credit counseling: Debtors must meet with a credit counselor in the six months prior to applying for bankruptcy. And, before debts are discharged, debtors must attend money management classes at the debtor's expense.
Scope of discharge: Debts owed to a single creditor totaling more than $500 for luxury goods incurred within 90 days of filing are presumed nondischargeable; cash advances of $750 within 70 days are similarly treated.
Repeat filings: A discharge will not be granted in Chapter 13 if the debtor obtained a discharge in Chapter 7 or 11 within the four years before the date of filing of the pending case, or in a Chapter 13 case filed within 2 years of the pending case.
Homestead exemption: Currently if you declare bankruptcy, the state where you file may allow you to protect from creditors some or all of your home equity. In Florida, for example, your home may be entirely exempt. The new law places more stringent restrictions on the exemption. Unlike most of the other provisions, the new homestead exemption went into effect in April.
Attorney verification: Attorneys must make "reasonable inquiry to verify that the information contained" in petitions and schedules are "well grounded in fact." If they do not, the attorney may be subject to various fees and fines.
Tax returns: The debtor must provide a copy of his latest tax return or a transcript at least seven days before the meeting of creditors or the case shall be dismissed.
Sources: Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, American Bankruptcy Institute, CNN Money.


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