NewswireToday - /newswire/ -
Temecula, CA, United States, 2006/02/08 - Never before in the history of personal and corporate bankruptcy have we seen more of an opportunity to help people. We finally have objective measures and a means to test that will stand up to scrutiny.
Last year Congress passed massive legislation that completely altered the playing field of bankruptcy proceedings for both individuals and corporations. The dust is just beginning to settle on the new bankruptcy rules, but already some opportunities for financial professionals have surfaced.
For example, a flexible means test to assess individuals' ability to repay their debts was part of the package. The formula takes into account whether the filer earns more than the state median income and can repay at least $100 a month of their unsecured debt over five years. Legitimate expenses such as food, shelter, clothing, medical care, transportation, attorneys' fees and charitable contributions are taken into account in the analysis.
However, the new law, which became effective October 17, has come under assault for being too restrictive, particularly in terms of the heavy paperwork and filing requirements that it involves. It was the first major revision to the bankruptcy laws since 1978.
According to records available, more than 500,000 Americans filed bankruptcy petitions in the two weeks prior to the date when the new provisions took effect. This compares to approximately 60,000 petitions filed in an average two-week period in previous years.
Enter the CPA...
Here is where the opportunity for the individual CPA presents itself. Linda Forbes of Bankruptcy Information says “Never before in the history of personal and corporate bankruptcy have we seen more of an opportunity to help people. We finally have objective measures and a means to test that will stand up to scrutiny.” Forbes recommends keeping records of all transactions and working closely with a personal financial consultant who specializes in bankruptcy protection. Additionally, getting assistance from legal counsel is sometimes advised especially in corporate bankruptcy proceedings.