The new bankruptcy law changes, which went into effect in 2005, made changes to the existing rules.  The new bankruptcy laws should not stop you from filing for bankruptcy, provided certain conditions are met.  These bankruptcy law changes have made the process more complicated, and less likely to be abused.  However, your right to file bankruptcy remains the same.

The main intent of the new bankruptcy law is to require people who can afford to make some payments towards their debt, to make these payments.  The new bankruptcy laws are more rigid in determining who qualifies to file Chapter 7 bankruptcy, which discharges most outstanding debt.

Some of the new changes include passing a “means test” in order to qualify for Chapter 7, state residence exemptions, counseling requirements, proof of income requirements, homestead exemptions, and guidelines for tithing and charitable donations.  The “means test” is one of the biggest changes, and was designed to identify debtors who have the means to pay some money to their creditors.  If you are filing Chapter 7 or Chapter 13, you must provide proof of income to the bankruptcy trustee, including a copy of your tax return for the period in which the return was most recently due.

The new residency rule mandates that you cannot use the exemptions in your state of residence unless you have lived there for at least 2 years.  The new counseling requirement states that you must have finished financial counseling within the last 6 months before you can file, and the new tithing rule states that up to 15% of your income can be given to charity. This is a loophole that allows people who may be just over the threshold of having to file Chapter 13 to drop down low enough to qualify for Chapter 7 bankruptcy.