Bankruptcy Questions and Answers written by a former bankruptcy attorney. These FAQs have been written as a guide for consumers thinking of filing bankruptcy or deepening there knowledge of bankruptcy
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Bankruptcy Law

The New Bankruptcy Law & Fraud Prevention

When the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) went into effect in 2005, its intention was, in part, to close loopholes in the bankruptcy laws.

What was happening was that some people who didn’t need to file bankruptcy were filing and emerging with their debts eliminated, yet their assets intact.

They were essentially “beating the system”—and government and the credit card industry weren’t happy about it.

Liquidation & Exemptions in Bankruptcy

Before a person’s debts are discharged through Chapter 7 bankruptcy, the court has the ability to liquidate assets, which involves the court selling some of the filer’s property to repay creditors.
But many filers don’t have any assets liquidated because states have exemptions that safeguard property.

Before BAPCPA was passed, large or unlimited homestead exemptions in several states made it possible for debtors to shield assets in their homes, keeping them out of reach of creditors.
BAPCPA responded by placing a $125,000 limit on the allowed homestead exemption for any home bought or acquired within 1,215 days prior to filing Chapter 7 bankruptcy. (This limitation doesn’t apply if the debtor sells a home and uses the funds to purchase a new home within the same state.)

Qualifying for State Exemptions

Prior to BAPCPA, debtors only had to live in a state for the greater part of 180 days before being allowed to take advantage of the state’s homestead exemption. 

Now, BAPCPA requires debtors be a permanent resident of a state for two years in order to use that state’s bankruptcy exemption. 

If the debtor has been a legal resident of the state for less than two years, he or she is entitled to the exemptions allowed by his previous state of residence.

Bankruptcy Fraud

Exercising the old adage "where there's a will, there's a way,” some people determined to discharge their debt and retain their assets may still try to find ways to do so—but they should be prepared to face the consequences if they commit fraud.

Bankruptcy fraud is a serious crime and can even be a felony charge. Criminal punishment includes fines and prison time.

If you’re considering filing bankruptcy, it may be a good idea to have a bankruptcy lawyer on your side to make sure you’re following all aspects of the new bankruptcy law.



Bankruptcy Questions, Answers and Information

Bankruptcy FAQs
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What is Chapter 13 FAQ
Chapter 13 Bankruptcy Calculator
Who Should File Chapter 13 Bankruptcy FAQ
Chapter 13 Bankruptcy Process Questions
Bankruptcy FAQ – Chapter 13 – Case Dismissal
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Bankruptcy Lawyer FAQ Part I - Find An Attorney
Bankruptcy Lawyer FAQ Part II - Hire An Attorney
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Student Loan Debt in Bankruptcy FAQ
Non-Bankruptcy Solutions Vs. Bankruptcy FAQ
Bankruptcy Information
Bankruptcy Alternatives - Debtor's Options
US Federal Personal Bankruptcy Exemptions
US States Personal Bankruptcy Exemptions
Table Of Which US States Use Federal Exemptions
Bankruptcy Abuse Prevention Act - 2005
Chapter 11 Overview
Bankruptcy Forms
Dictionary Of Bankruptcy Terminology

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