An Overview of Chapter 7 Bankruptcy Essay Example | Topics and Well Written Essays - 500 words

An Overview of Chapter 7 Bankruptcy - Essay Example As a result, Congress recently passed the Bankruptcy Abuse Prevention and Consumer Protection Act 2005. This Act makes a number of significant changes to the Chapter 7 Bankruptcy framework (The New Bankruptcy Law: np). One major change is the need for all debtors considering bankruptcy under Chapter 7 or Chapter 13 to undergo credit counseling. This counseling is designed to aid debtors in determining whether bankruptcy is truly necessary and how a repayment plan might be worked out. Significantly, debtors must select an approved credit counselor. In addition, an income test is now applied to determine whether filers are eligible for the more popular Chapter 7 bankruptcy filing. To this end, a "means test" is employed to evaluate disposable income and to classify debts as secured, unsecured, and the degree of priorities. Another requirement imposes higher ethical duties on bankruptcy lawyers so that the attorneys must personally vouch for the accuracy of all information provided by the debtor. The expected effect is to make it somewhat more difficult and more expensive to retain a bankruptcy lawyer.