The Bankruptcy Abuse and Consumer Protection Act became law on October 17, 2005. This legislation was prompted in part by a spike in personal bankruptcy filings and was an effort by Congress to reduce the misuse of the bankruptcy system. Congressional supporters of the law worried that abuse of the bankruptcy laws would unfairly increase costs for non-bankrupt consumers.
Ten years later, it is questionable as to whether the reform law actually achieved its goals. The number of bankruptcy filings has dramatically declined since 2005, from almost 1.7 million to 920,000 in 2014, despite the Great Recession of 2008.
The “means test,” which measures a prospective bankruptcy filer’s ability to repay their debts along with other substantial changes to the bankruptcy code has decreased the number of “opportunistic” bankruptcy filings, but has also made filing for bankruptcy more difficult for consumers.
The requirement that prospective debtors must undergo credit counseling prior to filing for bankruptcy has had a positive impact. According to the Department of Justice, there are at least 140 nonprofit agencies approved by the government to provide pre-bankruptcy counseling. There are an additional 220 nonprofit entities approved to provide education for consumers while in the process of filing for bankruptcy.
These agencies are screened to make sure debtors are receiving valuable advice, free from scammers who prey on consumers in financial distress. These resources also provide consumers with valuable financial tools to help them avoid having to file for bankruptcy, again.
If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
