In order to cut back on what they perceived as unnecessary bankruptcies, the federal government created the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005. The law served to modify previous bankruptcy laws by lengthening the process and limiting exemptions and debt discharges. One important introduction to the bankruptcy procedure was the addition of credit counseling, a now mandatory institution for any person considering filing for bankruptcy to reassess their finances and address their creditors. As with many things in law, there are exceptions to the credit counseling clause of BAPCPA which may ease the process for a select few filers.
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Permanent exemptions to the law are available to three different groups of people. The first may be exempted due to physical disability, namely to a severity which may prevent them from building a career or maintaining financial stability. Secondly, psychological instability provides an exemption to credit counseling, as mental health would be necessary to understand the tenets laid out during credit counseling sessions. These two exemptions require the proper medical paperwork filed with the courts within a five-day period of requesting an exemption.
The final permanent exemption type is permissible to personnel of the armed forces in active military operations involving combat. These individuals are obviously not in a position to consider credit counseling, given the possible jeopardy of their situation. Like medical exemptions, these individuals are expected to file paperwork that verifies their deployment with the court within five days of the request for an exemption.
Following a formal filing for permanent exemption, the request goes before a judge in a hearing, which determines if the request is valid.
The other form of exemption available for those incapable of going through credit counseling exists to be determined by a US trustee. Trustees may determine whether the individual is in a position to contact a counseling agency in terms of the agency's availability. If the bankruptcy trustee decides that there is not a sufficient number of agencies to assist the filing individual, the credit counseling portion of a bankruptcy may be exempted.
Major Changes in the BAPCPA
There are plenty of changes enacted by the BAPCPA. Major changes are:
- Allowing a waiver of Chapter 7 filing fee if the debtor meets guidelines
- Amending an appellate structure to contain Direct Appeals to the District Court
- Instituting a "means test" for debtors of Chapter 7 bankruptcy
The U.S. Courts can provide a complete list for the Interim Rules and Forms.
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