U.S. Bankruptcy Law is based on provisions within the U.S. Constitution designed to protect its citizens. The "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,” was passed in April 2005 and represents the most sweeping revision of the bankruptcy code since the great depression.

As written, its primary purpose is to protect the interests of creditors, not consumers. As a result, it will be much tougher for struggling consumers to qualify for Chapter 7 bankruptcy. Many individuals will who would previously be able to fully discharge (write off) their debt will now only have the option of Chapter 13 bankruptcy.

The most significant change will the the adoption of a "means test" to determine eligibility for Chapter 7 bankruptcy.  If your income is greater than the median income of the state, then Chapter 7 bankruptcy is allowed only in extreme circumstances.

In chapter 13 bankruptcies each claimant's allowable living expenses are determined and the amount of remaining income is used to determine the portion of debt to be repaid and the payment schedule.  The new law also revises the procedures for calculating allowable expense by replacing actual expenses with a government estimate.  

As you can see, the new law can have a significant impact of your financial situation after bankruptcy. In addition to having a greater portion of debt remaining, Chapter 13 bankruptcies are more expensive and more time consuming for all involved; the consumer, the lawyer, the creditors, and the courts. As a result, the quality of legal representation becomes  even more significant than in  chapter 7 cases. The importance of having someone who truly understands all the details of your situation and the effects of the new bankruptcy law is vital.