With forecasters predicting a hurricane season for 2010 that could be one of the strongest on record, many Americans are facing worst-case scenarios while already in precarious financial situations. When dealing with hurricanes, highly destructive tropical storms, and flood damages that can follow in related storm cells, these times of emergency can press the bankruptcy regulations updated by the BAPCPA to an almost untenable limit.
After Hurricane Katrina wreaked havoc on the Gulf Coast in 2005, bankruptcy officials working under the Trustee's office recognized the potential for massive groups of citizens to be placed in a position where the laws would be insufficient to deal with their level of crisis. Under their circumstances, restrictions such as the means test and credit counseling could prevent a timely and helpful bankruptcy, relegating these individuals to the harsher alternatives.
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In order to compensate for the looming backlash from bankrupt Gulf Coast residents, the US Trustee's office put together emergency guidelines for natural disaster victims. Among the changes, the Trustee-backed changes primarily to suspend the more limiting aspects of the BAPCPA. The mandatory credit counseling stipulation is waived altogether, and the Trustee's office may offer debtors a means to get in contact with creditors if their regular mode of communication has been destroyed or damaged. The means test, perhaps the most restrictive addition from the BAPCPA, is modified to not include certain assets that were caught in the path of the disaster. Documents that were similarly destroyed are considered lost without liability placed on their owner, meaning that a person cannot be charged with fraud if a storm devastates their personal financial files.
However, it is important to note that these modifications to the pre-existing law are not a code of laws in their own right. A judge may elect to override the US Trustee's provisions under their interpretation of the bankruptcy code. These sua sponte, a phrase roughly translating to "by its own will," actions are left to the discretion of the judicial system. To best determine whether your situation fits under this disaster response profile, contact a bankruptcy lawyer to learn more.
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