Pub. L. 109-8 eff. 10/17/2005
The Bankruptcy Abuse Prevention and Consumer Protection Act acted April 20, 2005, significantly changed the U.S. Bankruptcy Code in several respects.
Waiting Period Between Filings
Automatic Stay Exceptions
Exemption Forum Shopping
Stricter Notice Requirements
Can Client File A Chapter 7?
1) Filed before?
a. The length of time between Chapter 7 discharges is 8 years.
b. A Chapter 13 will be denied when the debtor has received a Chapter 7 discharge within the last 4 years or a Chapter 13 discharge within 2 years.
2) Income Too High?
a. Means Test: Debtors presumed ineligible for a Chapter 7 discharge if income > Ohio’s highest median family income.
b. Means testing: http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm.
Household Annual Monthly(11-2012)
1 person: $40,471 $3,373
2 person: $50,253 $4,188
3 person: $58,376 $4,865
4 person: $70,599 $5,884
3) Afford Cost?
a. Filing Fee: $306. May pay in 4 installments. Waive fee if income < 150% Poverty: Monthly: $1,396 (1), $1,891 (2).
b. Attorney Fee: $600 HRAP fee. Income < 187.5% Poverty: Monthly: $1,745 (1), $2,364 (2).
c. Credit Counseling: Completed within 180 days of filing.
N.D. and S.D. Ohio Approved Counseling Agency List:
4) Wait To File?
a. Residency: A debtor must reside in a state for a period of 730 days (2 years) prior to filing bankruptcy under that state’s exemption laws. Otherwise must use a prior state’s exemptions. See: http://www.standardlegal.com/law-library/Recent-Bankruptcy-Law-Changes.html
Should Client File A Chapter 7?
5) Judgment Proof?
a. SS, Pension, SSI, VA, Unemployment and Worker’s Compensation is not garnishable.
b. No assets in excess of those listed below:
c. Non-exclusive list of exemptions were adjusted per the Consumer Price Index on April 1, 2010 and again every 3 years, ORC § 2329.66.
|1||Home; Each person on the title||$21,625|
|3||Cash on Hand or Owed, Tax Refunds, & Money on Deposit||$400|
|4a||Household Goods, Furnishings, Clothes, Appliances, Books, Animals, Crops, Musical Instruments, Guns, Hunting & Fishing Equipment||$11,525|
|5||Tools of Trade||$2,175|
|6||Beneficiary Funds, Life and Health Insurance||unlimited|
|9f||Disability Financial Assistance||unlimited|
|9g||IRS Exemptions||100% of payments under child tax credit & earned income tax credit|
|10||Retirement Account Funds including Pension, Benefit, Annuity, Retirement Allowance, Accumulated Contributions, PERS Deferred Compensation, Ohio Public Safety Officers Death Benefit Fund, IRA, Roth IRA, Education Individual Retirement Account & Keogh or H.R. 10 Plan||unlimited|
|11||Child and Spousal Support||unlimited|
Greater of either
2) 75% of disposable earnings
|30 times is $217.50
60 times is $435.00
100 times is $725.00
|17||Federal Exemptions (Various)||unlimited|
|18||General Exemption (Wild Card)||$1,075|
6) Debts Non-Dischargable
a. There are 19 categories of debt excepted from discharge
under chapter 7, including:
i. debts for alimony and child support,
ii. certain taxes,
iii. debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit,
iv. debts for willful and malicious injury by the debtor to another entity or to the property of another entity,
v. debts for death or personal injury caused by the debtor’s operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and
vi. debts for certain criminal restitution orders.
b. Other debts may be non-dischargeable if a creditor timely files and prevails in an action to have such debts declared non-dischargeable:
i. Debts for money or property obtained by false pretenses,
ii. debts for fraud or defalcation while acting in a fiduciary capacity, and
iii. debts for willful and malicious injury by the debtor to another entity or to the property of another entity.
7) Too Much Equity in Home?
a. Consider a reverse mortgage to either
i. Lower equity below exemption, or
ii. Use proceeds to pay off debt and retain the home.
iii. Consumer Credit Counseling (800-966-3328) can help client negotiate lump sum payoff of debt with reverse mortgage proceeds.
b. Consider a Chapter 13 to pay off debt and retain the home.
8) Use Automatic Stay
a. Stops new and ongoing lawsuits, garnishments, utility terminations, letters and collection calls.
b. Some senior clients, even though judgment proof, will file a Chapter 7 solely to stop creditor harassment.
c. Stay generally does not stop evictions based on a judgment obtained prior to the bankruptcy filing.
d. Stay does not apply to a child or spousal support wage withholding order.
e. The stay may be effective only for a short time in some situations, such as when a secured creditor seeks relief from the stay in order to pursue its state law rights against the collateral or seeks relief from the stay as a way to force a debtor to make interim payments to the secured creditor as a condition to the stay remaining in effect.