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Debtors’ Responsibilities
FS-2005-18, November 2005
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) amends the U.S. Bankruptcy Code by adding new responsibilities for debtors.
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In general, the new law requires that debtors comply with their:
Tax-filing responsibilities
Make available previously filed tax returns
Seek credit counseling services
Most BAPCPA provisions apply to cases filed on or after Oct. 17, 2005.
Tax Returns must be filed
Under the new law, if debtors fail to file a return that becomes due after the date of their bankruptcy petition, or fail to file an extension, the IRS may request the Court to order a conversion (change from Chapter 7 to Chapter 11 or from Chapter 11 to Chapter 13, for example) or dismissal of the case. Conversion or dismissal may also be ordered if a Chapter 11 debtor fails to timely pay tax obligations owed after the date of the bankruptcy petition.
In order to have their plan confirmed, Chapter 13 debtors must also file all tax returns with the IRS for the four-year period before the bankruptcy petition. The debtor must establish filing by the first meeting of creditors.
Seven days before the first meeting of creditors, debtors must provide trustees a copy of their most recently filed federal tax return or a transcript of the return. Similarly, copies of amendments to such returns, and any past due returns filed while the case is pending, must also be filed with the court if requested.
The returns or transcripts must be provided to the court at the same time they are filed with the IRS. If the returns or transcripts are not filed, a Chapter 7 discharge will not be granted, or a Chapter 11 or 13 plan will not be confirmed. In addition, debtors must also provide a copy of the tax return or transcript to requesting creditors.
Means Testing for Chapter 13
Under the new law, individual debtors who meet certain income tests will be required to make regular payments on their debts under a Chapter 13 plan. The new law also authorizes the bankruptcy courts to modify IRS expense standards and use them to make this “means test.”
Are you in need of a texas lawyer focusing in Bankruptcy law and litigation? If so, contact us now and receive a free case evaluation.
Are you in need of an expert Texas Bankruptcy attorney that is focused in protecting your rights?... If so, contact our Texas Bankruptcy attorney now and receive a free Bankruptcy case evaluation for Texas and national Laws.
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