New Bankruptcy Law

You'll probably need a lawyer...

The Bankruptcy Abuse Prevention & Consumer Protection Act of 2005, in effect since Oct. 17, 2005, requires debtors to pass more stringent guidelines to determine whether they can have their debts liquidated through Chapter 7 or whether they must enter a repayment plan through Chapter 13. Below is a description of each category. Because the new law makes it more difficult for consumers to file bankruptcy, consumers should consult with bankruptcy attorneys in their area to make sure they file the necessary forms to discharge debt.

-- A strict financial means test that will prohibit many debtors from filing a liquidation bankruptcy under Chapter 7;

-- A requirement that all debtors must receive a briefing from an approved credit counseling agency at least six months before they can file their bankruptcy case;

-- A requirement that debtors take an approved class on debt management techniques before they receive their bankruptcy discharge;

-- A provision making it easier for a court to dismiss a bankruptcy case outright or to convert a Chapter 7 case to a Chapter 13 case and;

-- A provision permitting a court to impose sanctions on attorneys, or even on debtors, for filing a Chapter 7 case;