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by John M. Roberts

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law on April 20, 2005. Some of the provisions took effect immediately but most of the provisions will take effect on October 17, 2005.

The new laws makes the bankruptcy process more difficult and less friendly to people and businesses who need bankruptcy relief.

The courts have been given the authority to determine which chapter of the bankruptcy code an individual can file under and prohibits some people from filing period.

Although a person's income has always been used to determine his ability to complete a bankruptcy process, under the new laws, the courts have been given authority to look closer at a persons financial standing and to make the decisions based on income more stringent.

Repayment of debt will now depend on the states median income. If your income is higher, the guidelines will be tougher.

The new laws allow guidelines to be established by the IRS for your particular region of the country and if the cost of living is higher where you live, you may find it more difficult to pay into the plan.

Some debts will no longer be able to be discharged through your bankruptcy plan, such as student loans and some court ordered payments.

Credit card debt protection, in some cases, has also been eliminated altogether. Credit card debt may or may not be discharged through bankruptcy proceedings.

The new laws limit the protection bankruptcy once guaranteed from bill collectors and creditors. Some aspects of the "automatic stay" have been changed so some creditors can still file lawsuits and evictions while you are in bankruptcy proceedings.

You may be required to pay for and attend mandatory debt counseling. You may also have to complete a course on personal financial management within a six month period before filing for bankruptcy.

More time requirements between bankruptcy discharges and new filings have been instituted. The filing times between Chapter 7 bankruptcies have gone from six years to eight years and subsequent time line filings for Chapter 13 bankruptcies have also changed.

Homestead exemptions have not changed in most states, however, people in states with unlimited exemptions, or exemptions greater than $125,000, may be effected. Check with your state for current exemptions.

Even though the new changes under bankruptcy protection are more creditor friendly, filing a bankruptcy petition may still be the best course of action for you and your financial situation.

Although you can still file a bankruptcy petition on your own, it is advisable to consult an attorney because many of the new changes are significant. There are stricter guidelines and less protection from creditors.

Chapter 7 Bankruptcy

Chapter 13 Bankruptcy

Bankruptcy laws are Federal Statutes and are administered and supervised by U. S. Bankruptcy Courts.



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