The bankruptcy Reform Act in 2005 created some important changes for anyone trying to file personal bankruptcy. Some bankruptcy lawyers refer to this law as BARF (bankruptcy abuse reform fiasco) because it was regurgitated by Congress in an effort to making this more difficult for consumers. The end result is a complex law that lawyers and judges are still trying to figure out.
Here are some things you need to be aware of if you’re thinking about filing bankruptcy under the new law:
You are required to participate in credit counseling within 180 days prior to filing a bankruptcy. You must do so with an approved agency and receive a certificate to prove that you have taken the course. If you have to file immediately in order to avoid foreclosure, you may be able to take the course within 30 days after filing Chapter 7. As long as the credit counseling course is approved, you may be able to take it in person, online, or on the phone. In any case, you will still need some sort of certificate to prove your compliance with this requirement.
You also have to send copies of recent income tax returns to the case trustee who represents the creditors at your hearing. Also, if any creditors request a copy of your federal tax return, you must also provide them with a copy.
If you are filing Chapter 13, you are required to have filed all of your tax returns (federal state and local) for the past four years. If you have not, you can request an extension and receive some extra time up to four months.
You also have to provide evidence such as pay stubs of the income that you have received for the past 60 days before filing bankruptcy. You also will be required to complete an approved course for financial management.