Part III of XI
Written by Beckett Cantley and Geoffrey C. Dietrich
This article follows the outline contained in Part I, which can be read at www.cantleydietrich.com.
The BAPCPA requires that a consumer bankruptcy filer: 1) obtain credit counseling and a credit report, as evidenced through the filing of a credit counseling certificate; 2) file a copy of any repayment debt plan (if filing is made under or involuntarily converted to Chapter 13); 3) file a statement certifying that the clerk provided notice; 4) file a document that shows any potential increases in expenses or income in the 12 months following filing; 5) file a copy of all documents showing money obtained sixty days before the petition was filed; 6) file a federal income tax return before the creditors’ meeting; and 7) file a monthly net income statement. The BAPCPA clearly requires more work, and likely more cost to consumers, in the form of drafting and filing additional pleadings and disclosures.
In addition, the BAPCPA requires that any attorney who signs a petition, pleading, or written motion must conduct reasonable due diligence by inquiring into the accuracy and completeness of the filings, particularly the schedule of assets and liabilities. Section 102(a)(2)(C) of the BAPCPA provides that the signature of an attorney on such a document shall constitute a certification that the attorney has: 1) performed a reasonable investigation into the circumstances that gave rise to such document; and 2) determined that such document is well-grounded in fact and warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law and does not constitute an abuse under section 707(b)(1) of the Bankruptcy Code. An attorney faces increased personal liability for debtor misrepresentations and inaccuracies in such filings, under the BAPCPA, and these increased costs would likely be passed on to the consumer bankruptcy client. In 2005, the American Bar Association estimated that the requirement that an attorney conduct reasonable due diligence to verify the veracity of all schedules and petitions filed would increase attorney costs anywhere from $150 to $500 per case. The CBO estimated that the aggregate cost of complying with this requirement would be between $240 million and $800 million in fiscal year 2007.
The BAPCPA also increases court filing fees. Filing fees paid to the court have risen from $209 to $299 for Chapter 7 and from $150 to $274 for Chapter 13. However, the BAPCPA also offers a provision for waiver of the filing fee (discussed immediately below).
The in forma pauperis (“IFP”) provision of the BAPCPA allows for a filing fee waiver for debtors with income of less than 150% of the federal poverty level and an inability to pay the Chapter 7 fees in installments.
The BAPCPA requires that all individual debtors in either Chapter 7 or Chapter 13 complete an "instructional course concerning personal financial management" prior to obtaining a discharge of debt. The instructional course on personal financial management is an independent requirement of the credit counseling requirement, and the failure of a debtor to complete the instructional course—an independent requirement--constitutes grounds for the denial of debtor’s discharge of debt. The credit counseling requirement and financial management course required before a discharge is granted add at least $150, absent fee waiver.
This is the third of eleven installments of this article. The entire article may be found at www.cantleydietrich.com.
