Generally, bankruptcy is considered the debt management option of last resort
because the results are long lasting and far reaching. The Bankruptcy Abuse and
Prevention Act of 2005 established more stringent rules for consumers and attorneys.
The filing process is now more difficult for debtors:
- Debtors must file more documents; including itemized statements of monthly net
income, proof of income (pay stubs) for the last 60 days, and tax returns for the
preceding year (four years for Chapter 13).
- Debtors must take a pre-filing credit counseling and post-filing education
course to have debts discharged.
- Debtors face increased filing fees, plus fees for credit counseling/education.
- The bankruptcy petition and process are more complicated, so it's very difficult
to file without an attorney.
The filing process is now more difficult for attorneys:
- An attorney's signature on a petition certifies that the attorney
has performed a reasonable investigation into the circumstances giving rise to
the petition.
- Attorneys must carefully review documents such as tax returns and pay
stubs, as well as ask clients for credit reports.
- Attorneys are more apprehensive about sanctions.
If you have concerns about approved credit counseling agencies or credit counseling
providers, visit the U.S. Trustee Program website or
call 202-514-4100.
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