Originally published July 30 2005
Bush changes bankruptcy laws
by Mike Adams, the Health Ranger, NaturalNews Editor
President Bush, stating that too many people were abusing bankruptcy, has signed the Bankruptcy Abuse Prevention and Consumer Protection Act, which becomes effective Oct. 17.
On Oct. 17, the Bankruptcy Abuse Prevention and Consumer Protection Act goes into effect, drastically changing the country's existing bankruptcy laws.
In signing the bill on April 20, President Bush said too many debtors have abused the bankruptcy laws and wiped their debts out even when they had the means to repay.
The new legislation will allow better credit rates to be extended, he said, by requiring those who can to pay back at least a portion of their debts.
Local bankruptcy attorney Carol Stebbins said credit card companies lobbied heavily for the new legislation and her gut reaction is the BAPCPA will deny a large number of Americans access to Chapter 7 relief.
The U.S Trustee Program already monitors Chapter 7 petitions to determine whether the debtor is able to repay a portion of the debt through Chapter 13.
BAPCPA will apply even more restrictive standards to Chapter 7 petitions, and the income and expenses of debtors presumed to have the ability to repay their debts will be closely scrunitized.
In the means test, if a debtor's current monthly income, minus deductions for necessary expenses such as transportation, housing and utilities expenses, and secured and priority debt, is greater than two trigger points, a court is required to presume abuse.
Stebbins said that under the new law, in Chapter 13 bankruptcy a debtor may be required to contribute all disposable income toward a five-payment plan.
It's here that a housing issue arises, according to Stebbins.
If, for example, a housing budget specified by local IRS standards sets the limit for living expenses at $400 a month but the rent is actually $650, under the new law, it is possible that debtors won't be able to deduct that extra $250, even if it's part of the mortgage payment.
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