6 Common Errors in Filing for Personal Bankruptcy

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA") which went into effect last October imposes a variety of new and somewhat complicated burdens on a debtor wishing to file for personal bankruptcy. The process does not need to be painful however- as long as the debtor knows what is required under the new law, he or she can have a successful and simple bankruptcy filing. Below is a list of the 6 most common mistakes that a debtor should be careful to avoid when filing his or her bankruptcy petition:

1. Failing to receive credit counseling briefing: Prior to filing for
bankruptcy, a debtor must first receive a credit counseling briefing with an agency that has been approved by the U.S. Trustee's office.

2. Filing Too Soon: There are a number of new restrictions on repeat filings. A debtor cannot file for chapter 7 bankruptcy if he has received a chapter 7 discharge within 8 years of the current filing.

3. Failing to Take a Financial Education Course: Debtors filing
under chapter 7 or chapter 13 must complete an approved financial management course before they can obtain a discharge. This course must be taken after the petition is filed and not more than 45 days after the meeting of creditors.

4. Failing to Meet the Residency Requirements: The new law has lengthened the domicile requirement that a debtor must satisfy in order to be eligible for a state's exemption laws. These exemptions used to be based upon the law of the state where the debtor has been domiciled for the 180 days before filing. Now, a debtor must have lived in a state for 730 days prior to filing in order to avail himself of that state's exemption laws.

5. Failing to Provide Tax Returns: If either the court, the U.S.
trustee, or a party in interest requests that the debtor provide his past and/or current federal tax returns, than the debtor must comply with this request and file the returns with the court.

6. Failing to Meet Certain Income Requirements: Under the new law, the Bankruptcy Court can dismiss a debtor's chapter 7 petition if the debtor's income exceeds a certain dollar amount. A debtor whose income exceeds the median income for his living area must use a "means test" to calculate income and expenses. This "means test" must be applied before a bankruptcy case is accepted.