Yes, you can still file bankruptcy.
- Related Practices
Date: January 25, 2007
On October 17, 2005, the provisions of the Bankruptcy Abuse Prevention And Consumer Protection Act (BAPCPA) went into full effect. In anticipation thereof, bankruptcy filings rose by approximately 800% in the preceding two months. One of the reasons for this influx of cases was the belief by bankruptcy practitioners, and reports from news outlets, that bankruptcy would no longer be available as an alternative for financially distressed people. It is now over a year since BAPCPA went into effect, and in reality: little has changed for the debtor.
The provisions of BAPCPA which caused the greatest concern, before its enactment, dealt with a "means test" which debtors had to pass. This test does not apply to debtors whose debts are primarily business related. The test does not apply to those who make less then the state median income. In essence, studies post-BAPCPA enactment indicate only a minimal percentage of those who file bankruptcy would actually be effected (anywhere from 3-15% depending on criteria of the study) The debtor does have some new obligations under BAPCPA. These include taking a consumer credit counseling course before filing and a financial management course after filing. Both courses have a minimal cost (approximately $50.00) and can be completed on the Internet or over the phone in roughly 60-90 minutes. One issue of concern, particularly in Florida, is the effect of BAPCPA on a debtor's homestead. Prior to the enactment, a Florida homestead was 100% exempt. If the debtor has resided in a Florida home (even if he/she moved from one home to another in Florida) for 1215 days (3 years and 3 months), the homestead is still 100%exempt. If the debtor moved to Florida and purchased a home in under 1215 days from filing bankruptcy, a $125,000 exemption may apply ($250,000 for married couples) The rules are somewhat complex in this regard and counsel should be sought to assist with any determination. Additional restrictions on homestead could occur if large pay-downs, or payoffs, of mortgages occur prior to the bankruptcy filing. Overall, the enactment of BAPCPA has imposed some additional burdens on both debtors and the attorneys who represent them. In actuality, these burdens have turned out to be minor. The possibility that a person would not be able to file bankruptcy under the new law has simply not manifested. Bankruptcy remains an option for the financially distressed and continues to provide them a chance for a fresh start in life, free from the burdens of past debts.
