New Bankruptcy Law
In October of 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act was passed, changing several things for bankruptcy filers.
The biggest change is the Means Test, which is approximately 85 questions that compare family size, income, and household expenses to averages established by the Census and IRS to determine if a family should have enough disposable income in order to pay their debts. If the Means Test finds that you do have disposable income you will likely be ineligible for Chapter 7 and be forced into a Chapter 13 bankruptcy if you file.
Each bankruptcy filer also has to produce more paperwork now including past tax returns and proof of expenses. Attorneys are also held accountable for making sure their clients are not hiding assets, which has driven up the cost of bankruptcy preparation so that bankruptcy attorneys can complete their due diligence.
The new bankruptcy law has not changed the fact that anyone can represent themselves in a bankruptcy proceeding, and the means test so far (in studies that were mandated by the new law) has only affected 1% of Chapter 7 Bankruptcy filers.
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