(Berkeley, CA - October 12, 2006) In the year since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) took effect on October 17, 2005, personal bankruptcy filings have fallen by half. New, complex eligibility rules have left many debtors confused, and news coverage about the new law convinced many people that that bankruptcy is no longer an option. But the truth is that most people over their head in debt still qualify for Chapter 7 bankruptcy's fresh start.
To help cut through the uncertainty and misinformation about the new law, www.LegalConsumer.com has launched a free online calculator that lets debtors quickly determine whether they are eligible to file for Chapter 7 bankruptcy.
Thousands of consumers have already used LegalConsumer.com's online calculator. The vast majority have had no trouble passing the law's new "means test," according to Albin Renauer, who built the online calculator and is a co-author of How to File for Chapter 7 Bankruptcy (Nolo 2006).
The means test is a mathematical formula designed to weed out people
who can afford to repay their debts. To fill out the official means test
form, debtors are directed to consult a half dozen tables posted on a government
website, (https://www.justice.gov/ust/eo/bapcpa/meanstesting.htm)
and perform a series of complex calculations based on numbers that vary
with income and location. The government offers no help in applying the
correct numbers or doing the calculation.
With LegalConsumer's online means test calculator, however, you just type
in your zip code and some financial information. The calculator applies
the correct local standards, does the math, and computes the bottom line
-- telling you whether you pass or not.
Renauer is not surprised that most people are still eligible to file for bankruptcy, despite predictions to the contrary. Advocates of bankruptcy reform suggested that it would curb an epidemic of dishonest filers who could afford to pay their bills but just didn't want to. Utah Senator Orrin Hatch pointed to charts showing a sharp rise in the number of bankruptcies. "We all know about the abuses of the system," he said.
But bankruptcies rose "because banks aggressively marketed credit cards and loans to people with shaky finances," says Renauer. "Most people who filed for bankruptcy under the old law really needed it, and people in similar circumstances now are still eligible--but the new law makes it a lot harder to figure that out."
The online calculator on LegalConsumer.com is free to consumers. Bankruptcy lawyers may also license it for their own websites, to show potential clients that erasing debts through bankruptcy really is possible --despite what they may have heard.
What: Means Test Calculator
Where: www.legalconsumer.com
When: Available now.
Why: Consumers can quickly and easily determine if they
qualify for Chapter 7 bankruptcy.
Cost: Free.
LegalConsumer.com offers Web-based tools and information for anyone considering bankruptcy. In addition to the means test calculator, consumers can find basic information about the bankruptcy process, where to file, what property their state's law lets them keep after bankruptcy, and how to find a local bankruptcy lawyer. There are also links to books that offer more information.
Albin Renauer, who developed LegalConsumer.com, is a co-author of How
to File for Chapter 7 Bankruptcy (Nolo 2006). Mr. Renauer, a Michigan
native (and lifelong Detroit Tigers fan) received his undergraduate and
law degrees from the University of Michigan in Ann Arbor.
For 17 years, Renauer wrote and edited books, software, and the website
at pioneering do-it-yourself legal publisher Nolo in Berkeley, California.
He started LegalConsumer.com in 2004 to explore new ways to use Internet
technology to deliver high-quality, localized legal information to consumers