Definition of bankruptcy abuse prevention and consumer protection act of 2005

legislation reforming the bankruptcy code designed to make filing for bankruptcy more difficult for debtors. Among the major provisions of the law:

1. Means test for Chapter 7 eligibility: A test of the debtor's income determining whether he or she can file under Chapter 7 or 13. If the debtor's income is greater than the state's median income, the debtor would most likely have to file a Chapter 13 repayment plan and not be able to file a Chapter 7 liquidation plan.
2. Mandatory credit counseling: Debtors must receive credit counseling from an approved nonprofit budget and credit counseling agency before they can file for bankruptcy.
3. Limit on auto lien-stripping: A secured creditor such as an auto lender can retain its lien until the payment of the entire debt, not just the secured portion, where the creditor holds a security interest in a motor vehicle purchased within 910 days of the filing.
4. Mandatory debtor education: A Chapter 13 bankruptcy filing will not be approved unless the debtor has completed an education course in personal financial management approved by the U.S. Bankruptcy Trustee.
5. Scope of discharge: Debts owed to a single creditor of more than $500 for luxury goods incurred within 90 days of the filing or cash advances up to $750 within 70 days cannot be discharged.
6. Serial filings: A Chapter 13 filing will not be granted if the debtor has obtained a Chapter 7, 11, or 12 discharge within the previous 4 years. A Chapter 7 debtor cannot receive a discharge if the previous discharge was received within the previous 8 years.
7. Homestead exemption: Debtors can elect the state exemption for the value of their home up to $125,000 if it was acquired within 1,215 days before the filing. This federal law overrides certain states such as Florida and Texas that formerly had unlimited homestead exemptions.
8. Reaffirmations: New disclosures are required detailing the rights of the debtor and specifying the amount of debt reaffirmed, rates of interest, when payments begin, court filing requirements; the right to rescind and certification that the agreement does not impose an undue hardship on the debtor.
9. Limit on automatic stay: Limits the application of the stay and provides that it does not go into effect where there have been serialfilings or under other circumstances that would indicate bad faith or abusive filings.
10. Duration of Chapter 13 plans: If the debtor's income is greater than the state median income, a Chapter 13 plan must be for five years.
11. Dismissal for failure to file documents: Failure to file proper documents within 45 days of filing the petition will result in automatic dismissal of the case.
12. Attorney verification: Attorneys who sign the bankruptcy petition with the debtor must make reasonable inquiry to verify that the information in the petition is well grounded in fact. If the information later turns out to be false, the attorney can be held responsible.
13. Debtor statement of intent: Debtors must provide a statement of intent about their secured property within 30 days after the date set for the first creditor's meeting.
14. Eviction proceedings: The bankruptcy filing will not prevent an eviction if the debtor does not pay his or her rent after the filing.
15. Nondischargeable student loans: Student loans are not dischargeable through bankruptcy, and this is extended to loans from for-profit and nongovernmental institutions.