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The new bankruptcy law drastically changed the options that a person in financial trouble had available to them. Even the simple act of buying a car after filing bankruptcy has changed.

As a matter of fact, under the rules of the new bankruptcy law, the more equity you have in your home, the greater the chance is that you will have to use that equity to pay off your creditors. This does nothing but increase the odds that you'll forfeit it through foreclosure. The new changes in the law make filing for bankruptcy more expensive, making it more difficult for the people that really need it to take advantage of it. In addition, the new law, instead of wiping out some debts that would have been dissolved under the old bankruptcy bill, will force the person into a repayment plan. And all of this information will go on your bankruptcy credit report.

There are also a bunch of new fees that makes filing for bankruptcy more of a hardship for people already having financial problems. You'll be required to attend financial counseling both before and after filing for bankruptcy, which you'll be required to pay for. The bankruptcy law is much more complex, which means that your lawyer fees will be higher.

The prior bankruptcy laws were predicated on a belief that a person who had worked all his life, paid his bills on times, and was generally a good citizen, could have a chance to wipe the financial slate clean and start over in the event that through circumstances out of his control, he was unable to pay his bills. Sure, the system was taken advantage of by some, but in a society of laws, that's unavoidable.

Now some of the old laws were woefully out of date and were long past due for modification. So changes are good. But making modifications to the law shouldn't mean that you remove the safety net for people. This is particularly true when the debt position that a lot of of these people found themselves in were almost certainly mad worse by some of the outrageous late fees, percentage hikes, penalties, and other "profit centers" built into the lending practices of most of the major credit card companies.

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Tags: bankruptcy, Debt, Finance