The NEW BANKRUPTCY LAW'S took effect in October 2005. These changes may affect weather you may file a Chapter 7 Bankruptcy or a Chapter 13 which requires a repayment plan.

What is Bankruptcy?
Bankruptcy is a legal proceeding in which an individual who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

Chapter 7 - Liquidation
The most commonly filed chapter. Eliminates credit card debt, medical bills, some personal loans, and other unsecured liabilities.

• LAW CHANGES affecting Chapter 7 - A new "means test" is used to determine if a debtor can file Chapter 7. You must "qualify" to file chapter 7 based upon your income and living expenses regardless of the amount of your debt.

Chapter 13 - Adjustment of Debts of an Individual with Regular Income
Allows payment on your debt over up to a 5 year period, although usually less than all of your unsecured debt.

• LAW CHANGES affecting Chapter 13 - The debtor's disposable income will be calculated based on the IRS collection standards, instead of the judge's assessment.