Filing For Bankruptcy? Understand The Legal Requirements And Potential Loopholes

Posted on: 16 December 2015

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) are the guidelines everyone must follow when filing for bankruptcy. These guidelines mean that there are also loopholes that can be taken advantage of. Since Chapters 7 bankruptcy cases can be dismissed by the court if they feel you're abusing bankruptcy laws somehow, it's important to know what you can and cannot do when following the BAPCPA regulations.

Requirements of BAPCPA

There are some requirements that BAPCPA has for those filing for bankruptcy. One of them is that you must receive credit counseling 180 days prior to your bankruptcy filing and receive your certificate that states you went through the various counseling sessions.

You must also turn over your federal tax returns to the trustee of the bankruptcy, as well as creditors that have requested a copy. Pay stubs must also be submitted to the court to prove your income for the two months before you filed for bankruptcy.

Loopholes of BAPCPA

Even though there are regulations regarding Chapter 7 bankruptcies, there are ways to get around the restrictions so that you can use the loopholes to your advantage.

You are not forbidden from timing your bankruptcy filing, which allows you to file when you know that your personal income will be at a low point. If you have recently become unemployed or received a pay cut, you should wait until after two months have passed to file for bankruptcy.

If you do not think you will pass the means test, you can lower your income by deducting your health insurance premiums or any disability insurance that you have for yourself and dependents. This is helpful if you recently lost a job that had health benefits and now need to pay for insurance on your own. Having a car payment and high mortgage can also help you pass a means test if you still have a large income.

Under the BAPCPA regulations, median incomes are determined based on the amount of people living in a household. The kind of people living in your home that can help lower your median income include relatives, foster children, unrelated residents, wards, and lodgers. More people living in your home can lower your median income to help pass a means test.

The best way to ensure that you qualify for your bankruptcy is to work with a lawyer, such as Michael D Hart PC. They are familiar with the requirements of bankruptcy, as well as the loopholes you can use to your advantage.