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Houston Law Firm Launches Toll-Free Consumer Bankruptcy Hotline
to Address Confusion Over New Bankruptcy Laws

Houston, TX July 12, 2006 -- The Bankruptcy Abuse and Consumer Protection Act, also known as BACPA, not only changed the bankruptcy law, it created a significant amount of confusion and misinformation among consumers, the media and even creditors. In an attempt to help clarify the confusion, the Houston, Texas based law firm of Busby & Associates, P.C. set-up a new consumer bankruptcy hotline number, 1-888-422-6423, to answer general questions about the Act.

The hotline addresses the issues and concerns of individuals facing lawsuits, foreclosure, and/or repossession, particularly individuals who may be contemplating bankruptcy due to debt problems. The hotline was the brainchild of bankruptcy attorney Michael G. Busby Jr., who along with a dedicated staff of professionals, spent several weeks in the summer of 2005 attending various national seminars in preparation for the implementation of the reform act.

"Many consumers are complaining about collection agencies stating that the consumers cannot file for bankruptcy or that the consumer will not qualify as a result of the new act," according to Michael Busby, Jr., a partner with the firm that specializes in consumer bankruptcy, family law and criminal law, "The truth is that simply may not be the case."

"While the Act has definitely added to the complexity of the situation, it has not eliminated options for consumers faced with debt-related problems," he added. "About 80% of those consumers contemplating bankruptcy fall under the median income for their state. Median income is issued by the U.S. census bureau, and it is determined by the household size and income. If the debtor falls below the median income then the debtor will likely qualify for chapter 7."

Chapter 7 versus Chapter 13

Attorney Michael Busby, Jr. adds, "For those debtors who fall into the 20% of the above-median income, this doesn't mean that you are barred from filing a bankruptcy; instead, a test called the "means test" must be performed. Under the "means test," the debtor's income is determined by the last six months of income received and guidelines establish whether or not a Chapter 7 filing is applicable or if a Chapter 13 debt consolidation is required.

"Many variables factor into the determination of Chapter 7 versus Chapter 13 eligibility," Busby continues. "The new regulations point to the need for professional advice for anyone seeking bankruptcy protection."

For most debtors the paperwork is the same. However, one constant is that every debtor must undergo credit counseling before the case can be filed. The policy behind the credit counseling requirement is to encourage the debtor to attempt a debt management plan or a consolidation of their credit cards with a non-for-profit entity. The entities approved to conduct the counseling are, for the most part, undergoing a budget analysis, which concludes that filing bankruptcy is the only option. Busby & Associates, P.C., provides the debtor with a list of authorized providers.

Even if a debtor cannot file a Chapter 7, Busby & Associates, P.C., would still recommend a Chapter 13 bankruptcy vs. a private consolidation. Generally, the repayment plan proposed in a Chapter 13 is easier for the debtor to budget than the consolidation payment. Also, many times in a Chapter 13, the debtor will not pay 100% of the credit cards back. Most of the time there is no interest paid on the credit cards, and no issue exists in trying to negotiate lower interest rates, as with the a private consolidation. At the same time, penalties and over the limit fees are no longer assessed against the debtor. Finally, the debtor may consolidate secured debt in the Chapter 13, which cannot be done in a private consolidation.

For more information on Bankruptcy Abuse and Consumer Protection Act, personal bankruptcy, family law or criminal law, contact Michael Busby at 713-974-1151 (toll free: 888-422-6423) or visit their website www.busby-lee.com.

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