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Thursday, May 9, 2019

Changing the Requiring for Filing for Chapter 7 Bankruptcy Research Paper

Changing the Requiring for Filing for Chapter 7 bankruptcy - Research Paper Example nearlytimes it is enough to push a person to the brink of monetary disaster. At one time a person could seek Chapter 7 bankruptcy protection and put out the debt they could not afford to pay, but it is not so easy any more. When a person files for Chapter 7 bankruptcy protection, s/he acknowledges that s/he is unable to pay some or all told of his/her denotationors. Prior to 2005, people with jobs who just overextended themselves could file Chapter 7 bankruptcy and be free of credit razz or other debt such as medical bills, without relinquishing much of their property as dogged as they continued to make payments on the property on which they still owed money. Chapter 7 bankruptcy, also know as liquidation, contemplates an orderly, court-supervised procedure by which a trustee takes over the assets of the debtors estate, reduces them to cash, and makes distributions to creditors, subject to the debtors right to retain certain(p) exempt property and the rights of secured creditors (Office of the U.S. Courts, 2011). Often times, the debtor has no assetsthat is s/he does not own a house, car, or other valuable goods, or, if the debtor does own them, s/he owes so much debt on them, they are foreclosed or repossessed, or, before 2005, as long as the debtor was not in arrears, creditors could not repossess or foreclose on assets of those who filed Chapter 7 as long as their payments on those assets were current. in the beginning 2005, people who declared Chapter 7 bankruptcy often walked away from their debts with a stain on their credit history that, after a few years, no longer affected them in an adverse way. Some of these people got into trouble because they lacked the ability or desire to budget properly. Others experienced some sort of monetary setback like a catastrophic illness or injury. Some went on to rack up insurmountable debt again, only to have it discharged aga in through Chapter 7 bankruptcy. However, in 2005 the law regarding Chapter 7 bankruptcy filings changed so that deadbeat debtors could not file Chapter 7 bankruptcy so easily, and if they did file, the penalties were much greater. In 2005, the bankruptcy laws changed from one that favored the debtor to one that favored the creditor. People now cannot get into debt over their heads and then just file Chapter 7 bankruptcy to alleviate the debt they cannot afford. The Bankruptcy Abuse Prevention and Consumer bulwark Act of 2005 BAPCPA require the application of a means test to determine whether individual consumer debtors qualify for patronage under chapter 7. If such a debtors income is in excess of certain thresholds, the debtor may not be eligible for chapter 7 relief (Office of the U.S. Courts, 2011). In other words, if the debtor has a job, s/he may not be eligible for Chapter 7 bankruptcy. The means test requires that petitioners for Chapter 7 bankruptcy complete authorised Bankruptcy Form B22A, entitled Statement of Current Monthly Income and Means Test Calculation - For apply in Chapter 7. This then determines whether a presumption of abuse arises (Office of the U.S. Courts, 2011). Form B22A consists of eight pages similar to a federal official tax form that examines every source of income and debt a person has, allows for exemptions of some, and sets a limit of debts between $7025 and $11,725 and a limit of greater than 25% disposable income over five years to be eligible for Chapter 7. The prospering Gate University Law Review offers a hypothetical case of a couple with $28,000 of

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