Changes with the Bankruptcy Abuse Reform Act

What is the Bankruptcy Abuse Reform Act?

The Bankruptcy Abuse Reform Act of 2005 was designed to change the bankruptcy in the United States to prevent abuse. To do this they implemented several changes which each person has to comply with in order to complete bankruptcy.

These changes are:

  • Within 180 days before your bankruptcy is completed you have to seek credit counseling from an approved agency. The court will have a list of several local ones and possibly some national ones. This counseling can happen in person, over the phone, or even over the internet but whichever way you do it, make sure you get the required certificate to prove it’s completed.
  • In addition to credit counseling, you’ll have to take a personal financial management course. This needs to be approved by the bankruptcy trustee, so check with them to see which courses they recommend.
  • After filing bankruptcy, you will need to submit most recent federal tax returns to the bankruptcy court, the trustee and possibly to some creditors. It’s essential you have this completed and at the ready.
  • If you’re behind in filing your tax returns it’s time to catch up. Before your 341 meeting you’ll have to provide all the returns for the past four years. You may be able to get an extension of 120 days but this is something you should be prepared to submit.
  • Have your pay stubs handy, once you hit bankruptcy court they’ll want to see your pay stubs for the last 60 days at least.
  • If you have a Chapter 13 bankruptcy you’ll have to submit an updated statement of income and expenses every year to the bankruptcy court.