The New Bankruptcy Law - A Fresh Start Through Bankruptcy Will Be Much Harder After October 17, 2005

The purpose of this website is to provide free information to consumers about the new bankruptcy law. The new bankruptcy law was finally passed in April 2005 after nearly a decade of lobbying by the major credit card banks. Called the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005," this sweeping revision of the bankruptcy code goes into effect on October 17, 2005. As a consequence, it will be much tougher for struggling consumers to fully discharge their obligations in a Chapter 7 bankruptcy. Instead, many individuals will be required to file under the Chapter 13 provision, where a percentage of the debt must be paid back, usually over a five-year period.

 

One of the most significant provisions of the new law is the introduction of a "means test" to determine whether or not a person can file for Chapter 7. If your income is above the median for your particular state, then you will not be allowed to file Chapter 7 except under very special circumstances. To help you figure out where you stand, this site includes tables that show the current figures for median income by state.

 

Another major new factor in the revised code is the introduction of IRS schedules for "allowable" living expenses in Chapter 13 cases. So the court will ignore your actual documented expenses in most cases, in favor of the government determined schedules! This invasive new aspect of Chapter 13 bankruptcy will cause many people to think seriously about alternatives. By far, the best alternative to Chapter 13 is Debt Settlement. To help you understand your options, we provide a chart comparing Chapter 13 to Debt Settlement through creditor negotiation.


If you are seeking to avoid bankruptcy and would like additional information on the "do-it-yourself" Debt Settlement alternative, CLICK HERE to download a FREE 32-page report, "How to Eliminate Your Debts Quickly and Safely Without Filing Bankruptcy."


There are some aspects of the new bankruptcy law that will cause serious delays in filing for many people, as well as delays in completing the bankruptcy and obtaining a discharge. One key concern here is the provision that consumers must complete an approved financial counseling course. At the present time, a list of approved counseling organizations has not even been released to the public. As a consequence of this and other aspects of the new law which are subject to interpretation, consumers can expect to deal with a lot of confusion when they attempt to file bankruptcy after the new law goes into effect.


We hope the information on this site will help you to understand the new rules and to plan your debt resolution strategy accordingly.



© Copyright 2005. Manchester Publishing Company. All rights reserved.

Notice: This site is intended to provide general information only. The author is not an attorney and does not provide legal advice. The information provided herein is not intended to provide definite or specific advice with respect to bankruptcy. The consumer should seek the services of a licensed professional to determine filing eligibility for bankruptcy.