New Bankruptcy Laws:

• When a person files for bankruptcy, the companies who do not get paid pass those expenses on to their other consumers in the form of higher prices.

• More and more Americans were filing bankruptcy, so more and more other Americans were paying the price. This was having a major impact on the nation's economy.

• Congress felt that the laws then in place made it too easy for people to abuse the privilege of declaring bankruptcy, and that many people who filed for bankruptcy were able to pay at least some of their debts. One bill-collector noted the attitude of many people with this true example of a debtor. When the bill-collector called (for the umpteenth time) and finally got the debtor, the debtor said, "You people are driving me nuts with your calls." The bill collector said, "But, sir, you readily took---and kept---our money."

• You must complete a government-approved credit-counseling program with six months of applying for bankruptcy. A list of approved credit-counseling programs may be found at the U.S. Trustee Program's Website:
  http://www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm.

• You must show proof of income by providing a federal tax return from the most recent tax year. If you have not filed a return, you must do so before you can declare bankruptcy.

• If tax returns show your income is above the median income of your state, and if you are able to pay $100 a month to reduce your debt, you must file a Chapter 13 bankruptcy, not a Chapter 7. A formula, not your word, is used to determine if you can afford the $100 per month.

On the other hand, with a Chapter 13 bankruptcy, often called a "wage earner bankruptcy," you can keep all of your assets, but you must pay all or some of your debts, paying the same amounts as you would without the bankruptcy. A difference is that you do this under the protection of the U.S. Bankruptcy Court.

• Some automatic protections for those who have filed bankruptcy are no longer in place. For example a spouse can still take legal action to get child support, your landlord can still evict you, and the state can still suspend your driver's license.

• If you owe child support or alimony, those "bills" take supremacy over other kinds of bills.

• Even though you had a credit counseling program before you started the bankruptcy proceedings, once you have finished the bankruptcy proceedings you must take another government-approved education program in financial management before any debt can be discharged. The U.S. Trustee Program also offers a list of approved financial management programs:
  http://www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm.

• You are allowed to contribute up to 15% of your income to charity. Some people oppose this, seeing it as a loophole that could permit people who are on the income borderline to go with Chapter 7 bankruptcy, rather than Chapter 13.

• A summary of the law can be found here.
• The full law may be read here.

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