Final answer:
The incorrect statement regarding the 2005 Bankruptcy Act is that people with the ability to pay their debts can choose between Chapter 7 and Chapter 13 bankruptcy. The Act introduced a means test that may require individuals with sufficient means to file under Chapter 13 instead of Chapter 7. A is the correct answer.
Step-by-step explanation:
The correct answer to the question is A) people who have the ability to pay their debts can choose between filing under Chapter 7 or filing under Chapter 13. This statement is incorrect as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the 2005 Bankruptcy Act) implemented a "means test" that determines whether individuals filing for bankruptcy have the ability to pay their debts. If they have the means, they may be required to file under Chapter 13, which is a reorganization of debt, rather than Chapter 7, which involves liquidation of assets.
The other statements are correct. Lenders must indeed provide consumer information about the dangers of making only minimum payments on credit card debt (B), debtors who want to file for Chapter 7 must first undergo credit counseling (C), and Chapter 7 can be used for the liquidation of both secured and unsecured debts, not strictly credit bills or loans that are unsecured (D).
Hence, the provision of the 2005 Bankruptcy Act that impacts the choice between Chapter 7 and Chapter 13 based on the debtor's ability to pay is important to understand, as it protects the economic system from potential abuses while helping those genuinely in need of financial relief.