Bankruptcy: The Old Laws and the New


Richard Moore


September 27, 2005 
The Old Laws and the New 

Following are some of the differences between the current law
and the new law:

The current law:

        * Was enacted in 1978 and became effective in 1979.
        * Lets individuals chose between two forms of bankruptcy. The
        more popular, Chapter 7, lets people discharge unsecured
        debts, such as medical bills and credit card debt. But they
        can lose assets that secure debts, like  houses or cars.
        * In the other type, Chapter 13, individuals try to pay  their
        debts over three to five years, with protection from their
        secured creditors.

The new law:

        * Was enacted in April and becomes effective on Oct. 17.
        * Requires filers to provide more documentation.
        * Requires all filers to complete a federally approved credit
        counseling program.
        * Allows filers to use Chapter 7 only if a means test shows
        that they earn less than the median for their state, and do
        not have enough income, after living expenses, to repay at
        least $6,000 over five years.
        * Requires filers with more resources to file Chapter 13.
        * Gives judges discretion to let higher-income debtors file
        under Chapter 7, if they have "special circumstances."

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"Apocalypse Now and the Brave New World"