Provisions for Hurricane Katrina Victims Under New Bankruptcy Law
You’ve heard of the new bankruptcy law, whether you plan to file for bankruptcy or not. The law referred to as The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, took effect on October 17, 2005. The law imposes restrictions on who can file for bankruptcy under chapter 7.
Following Hurricanes Katrina and Rita, the United States Trustee’s office announced special guidelines intended to lessen the impact of the new law on victims of natural disaster. Many victims of the hurricane not only lost their homes but have no way of meeting the stringent load of paperwork required to file for bankruptcy.
Some of the exemptions made for victims of natural disaster include the following:
Mandatory Credit Counseling – The requirement to undergo compulsory credit counseling is waived.
Paperwork Load – Filers who cannot provide the paperwork needed to file for bankruptcy will not be penalized.
Passing the “Means Test” – Filers have a lot more leeway, when it comes to passing the means test because lost income and other negative financial effects of the disaster are considered as “special circumstances” that may allow a debtor, who otherwise wouldn’t pass the “means test” to file for bankruptcy under chapter 7.
Access the summary list of changes per the new bankruptcy law and how potential filers will be affected.