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New Report Questions Effectiveness of 2005 Bankruptcy Reform

According to a paper recently completed by the Federal Reserve Bank of New York, millions of Americans who would have filed for bankruptcy protection prior to the 2005 bankruptcy reform law have not done so because of the additional requirements and costs associated with the financial move. The paper, written by Donald P. Morgan, was titled “Is the 2005 Bankruptcy Reform Working?” and was released on June 4, 2012. If you are facing financial difficulties and considering filing bankruptcy in Oklahoma, contact our experienced bankruptcy attorneys at Oklahoma Legal Center today. Our law firm is located in Oklahoma City, and our bankruptcy lawyers have years of experience helping Oklahomans relieve their overwhelming debt via bankruptcy.

Americans Prevented from Filing Bankruptcy

In his paper, Morgan analyzed the number of bankruptcy cases filed between 2009 and 2011, and projected the number of bankruptcy cases that would have been filed during those years if the Bankruptcy Abuse Prevention and Consumer Protection Act passed in 2005 did not exist. The paper concluded that millions of consumers in the United States who would have filed for bankruptcy didn’t do so because of the establishment of this law. From 2009 to 2011, more than 4.3 million bankruptcy cases were filed across the United States. However, the Federal Reserve Bank members who compiled the recent report applied similar conditions to those that existed before the 2005 law was passed, and determined that more than 25 million bankruptcy cases would have been filed. In other words, two out of 1,000 American households filed for bankruptcy during the two-year period, compared to the projected rate of 12 out of 1,000 households.

Chapter 7 Means Test Requirements

In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protect Act (BAPCPA), a legislative act that made significant changes to the United States Bankruptcy Code. The law was passed by Congress on April 14, 2005 and was signed into law on April 20 by former President George Bush. Prior to the BAPCPA amendments, debtors of all incomes could file for bankruptcy under Chapter 7. The act, however, established a method by which a debtor’s income was calculated and weighed against the median income of the debtor’s state. According to the 2005 law, if a debtor’s income is above the state median income, the debtor is subjected to a “Means Test” before he is deemed eligible to file for bankruptcy.

Contact an OK Bankruptcy Attorney Today

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it more difficult for some consumers to file bankruptcy, adding additional requirements and costs for those who chose to file for bankruptcy protection. These requirements included obtaining and paying for credit counseling from an approved provider, which may have deterred many Americans from seeking bankruptcy protection. If you are struggling with debt and you think filing for bankruptcy in Oklahoma might be the right financial decision for you, contact our bankruptcy attorneys at Oklahoma Legal Center as soon as possible. With the help of our skilled bankruptcy attorneys in Oklahoma City, consumers considering filing for bankruptcy in Oklahoma can receive the financial help they need.

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