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Just Other Articles - The Major Changes Caused by the Bankruptcy Reform Act
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 went into effect in October of that year. As its name clearly implies, it was designed to make bankruptcy less attractive to filers and curb perceived abuses of the bankruptcy system.
The fight about this law was waged by financial institutions on the one hand and consumer rights
The fight about this law was waged by financial institutions on the one hand and consumer rights
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
advocates on the other. Lenders felt that the bankruptcy courts were being abused and that borrowers who had the means to repay were allowed to walk away from their obligations.
This, in turn, raised the cost of credit for the rest of us, since the losses were spread among those still solvent.
Consumer advocates argued that the majority of filers were i
This, in turn, raised the cost of credit for the rest of us, since the losses were spread among those still solvent.
Consumer advocates argued that the majority of filers were i
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
n that position because of unexpected bills – generally due to medical conditions – and that it would be a hardship to deprive consumers of their “fresh start” in order to fatten the profits of the lenders.
On the middle ground where those that felt the changes to the bankruptcy law would make little difference, since most filers fell under the median in
On the middle ground where those that felt the changes to the bankruptcy law would make little difference, since most filers fell under the median in
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
come of their home state and were so hopelessly in debt that they could never repay their bills.
The lenders won and the law, which is considered the most far reaching reform of the bankruptcy laws in 20 years, passed.
Here are highlights of the major changes likely to affect individual filers:
1. Credit counseling is required and must take place withi
The lenders won and the law, which is considered the most far reaching reform of the bankruptcy laws in 20 years, passed.
Here are highlights of the major changes likely to affect individual filers:
1. Credit counseling is required and must take place withi
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
n 6 months before filing. The counselor is supposed to determine if the debtor can file for Chapter 7 & or Chapter 13. He is also supposed to set up the Chapter Thirteen repayment plan, if applicable.
2. Since the main thrust of the act was to make it more difficult for high wage earners to get a Chapter Seven Discharge, if their income exceeds their sta
2. Since the main thrust of the act was to make it more difficult for high wage earners to get a Chapter Seven Discharge, if their income exceeds their sta
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
te’s median income, they are forced into a Chapter Thirteen repayment plan.
Once in this plan they are placed on a strict – some say draconian - budget determined by IRS regulations. They are told how much of their money is to go to debt repayment and how much they can spend on things like food and housing.
3. If the debtor ran up bills of $500 or more
Once in this plan they are placed on a strict – some say draconian - budget determined by IRS regulations. They are told how much of their money is to go to debt repayment and how much they can spend on things like food and housing.
3. If the debtor ran up bills of $500 or more
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
for “luxury goods” from a single source within 90 days of filing or borrowed $750 or more within 70 days of filing, these debts will be considered non dischargeable. If he bought a car within 2 and a half years of filing, the lien holder will keep his lien until the entire debt is repaid.
4. Debtors used to shield assets by buying homes in states with b
4. Debtors used to shield assets by buying homes in states with b
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
ig or even unlimited “homestead” exemptions. They would, in effect prevent creditors from being able to collect on their debts, by tying all their money up in a home in one of these states. Now the debtor has to acquire the house about 3 and a quarter years before filing a bankruptcy petition. Otherwise his exemption is limited to $125,000.
5. The debtor
5. The debtor
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
must “reaffirm” his secured debt or reveal what his intentions are regarding that debt within 45 days after the first creditors meeting. If he fails, the automatic stay is lifted and the creditor can foreclose, repossess or start a suit to collect his money. A debtor can no longer just pay the debt without reaffirming it.
6. Automatic stays will not be
6. Automatic stays will not be
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
granted if it can be shown that the debtor has had a habit of abusing the bankruptcy system. Many used to file bankruptcy petitions merely to hold off their creditors or to buy themselves time, having no intention of following through on the bankruptcy.
7. A Chapter 13 discharge will not be granted if the debtor obtained a Chapter 7, 11 or 12 discharge
7. A Chapter 13 discharge will not be granted if the debtor obtained a Chapter 7, 11 or 12 discharge
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
in within the 4 years prior to the date of filing or if a Chapter 13 case was filed within 2 years of the pending case.
8. More documentation must now be provided by the debtor. In addition to the list of creditors, schedules of assets and liabilities, income and expenses, debtors must also file:
A certificate of credit counseling
Evidence of payment f
8. More documentation must now be provided by the debtor. In addition to the list of creditors, schedules of assets and liabilities, income and expenses, debtors must also file:
A certificate of credit counseling
Evidence of payment f
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
rom employers received 60 days before filing
A statement of monthly net income and any anticipated increase in income or expenses after filing
Tax returns for the most recent tax year
Tax returns filed during the case including tax returns for prior years that had not been filed when the cases began
A photo ID.
Failure to provide the documents within
A statement of monthly net income and any anticipated increase in income or expenses after filing
Tax returns for the most recent tax year
Tax returns filed during the case including tax returns for prior years that had not been filed when the cases began
A photo ID.
Failure to provide the documents within
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
45 days after the petition has been filed will result in automatic dismissal of the case. However the debtor can apply for a 45 day extension.
9. The court will give support obligations first priority over everything but the administrative costs of a trustee. The automatic stay does not apply to the payment of domestic support or to the enforcement o
9. The court will give support obligations first priority over everything but the administrative costs of a trustee. The automatic stay does not apply to the payment of domestic support or to the enforcement o
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
f a wage garnishment. This includes obligations incurred either before or after the bankruptcy filing.
Failure to remain current on support claims is grounds for conversion of a Chapter 7 to a Chapter 13 case or complete dismissal of the petition. The debtor must be current on all his obligations in order to confirm a repayment plan and the plan must pro
Failure to remain current on support claims is grounds for conversion of a Chapter 7 to a Chapter 13 case or complete dismissal of the petition. The debtor must be current on all his obligations in order to confirm a repayment plan and the plan must pro
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
vide for priority payment of support.
9. The new law curbs the ability of the court to grant discharge of certain debts at the completion of the 5 year plan. Unpaid trust fund taxes, taxes for which returns were never filed or filed late within two years of the petition, taxes for which the debtor filed a false return in order to evade taxes, debts from
9. The new law curbs the ability of the court to grant discharge of certain debts at the completion of the 5 year plan. Unpaid trust fund taxes, taxes for which returns were never filed or filed late within two years of the petition, taxes for which the debtor filed a false return in order to evade taxes, debts from
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
fraudulent activities, debt unlisted in the petition, theft by a fiduciary, domestic support payments, student loans, damages for injuries caused by drunk driving, criminal restitution, fines, civil restitution or damages awarded for willful or malicious personal actions resulting in personal injury or death are now excepted from Chapter 13 discharge.
10
10
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
. The automatic stay will not prevent eviction if the debtor fails to pay his rent after the petition is filed.
11. Attorney’s can’t represent themselves as “Debt Relief Agencies”. They cannot advise the debtor to incur more debt before filing and among other things they must enter into a written contract specifying all costs and informing the debtor tha
11. Attorney’s can’t represent themselves as “Debt Relief Agencies”. They cannot advise the debtor to incur more debt before filing and among other things they must enter into a written contract specifying all costs and informing the debtor tha
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
t a lawyer is not necessary to file bankruptcy.
12. The trustee can void all transfers made to self directed trusts within 10 years of the filing, if he can show that the transfer was made to harm or defraud a creditor.
13. Federally guaranteed student loans were never dischargeable. Now student loans owed to for-profit and nongovernmental entities are
12. The trustee can void all transfers made to self directed trusts within 10 years of the filing, if he can show that the transfer was made to harm or defraud a creditor.
13. Federally guaranteed student loans were never dischargeable. Now student loans owed to for-profit and nongovernmental entities are
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
also not dischargeable.
14. A Chapter 13 discharge will not be granted until the debtor takes a course in financial management as determined by the trustee.
15. The time between Chapter 7 discharges has been extended to 8 years from seven to discourage “serial” filers.
Before the law took effect, there was a rash of filings, which was expected.
But s
14. A Chapter 13 discharge will not be granted until the debtor takes a course in financial management as determined by the trustee.
15. The time between Chapter 7 discharges has been extended to 8 years from seven to discourage “serial” filers.
Before the law took effect, there was a rash of filings, which was expected.
But s
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
ince then, after taking a brief dip, the number of bankruptcy filings is starting to climb again, which seems to indicate that maybe all has not gone as planned – which is, of course, nothing new where the government is concerned.
This article does not purport to offer legal advice, nor is it a complete summary of all changes made to the bankruptcy laws.
This article does not purport to offer legal advice, nor is it a complete summary of all changes made to the bankruptcy laws.
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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