Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005

Bankruptcy just got more difficult

Signed by President Bush in April 2005,  the new Fairness in Bankruptcy Reform Act will make it much more difficult for normal people to seek bankruptcy relief. So, as of October 2005, struggling families have a more difficult time seeking this type of protection from their creditors.

1. More restrictions on filing Chapter 7 (the one where you get a clean slate).  You won't be able to qualify for this type of bankruptcy if your yearly income is greater than your state's median income.  This will eliminate half the population will be disqualified and will instead have to file under Chapter 13  (where a repayment plan is set up).
2. If you file bankruptcy, you will be forced to finish a financial management course approved by the government and get credit counseling.
3. Under the new rules, more of your delinquent accounts will become "non-dischargeable" debt, which means it won't be as easy to seek protection from that credit card company you've been dodging.   In other words, more restrictions will placed on getting free from that heavy credit card debt load.
4. More twists and extra paperwork for the lawyers means more cost for their clients.  This itself will likely keep more people away from the option of declaring bankruptcy.
5. Debtors seeking to erase all debts will now have to wait eight years from their last bankruptcy before they can file again.