Old Bankruptcy Laws

The old bankruptcy laws were not as strict as the new bankruptcy laws. Under the old bankruptcy laws, many more people were able to file for bankruptcy protection even when they did not need to or only file for bankruptcy protection to get out of paying debts.

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was introduced to make it harder for people to file for bankruptcy and qualify for bankruptcy protection.

Some old bankruptcy laws discussed

Under the old bankruptcy laws, there was no income or expense test before filing a Chapter 7 bankruptcy. Even people with high income were filing for Chapter 7 bankruptcy protection under the old bankruptcy laws to avoid paying off their debts. The old bankruptcy laws made it easy for people to go into debts and then wipe them clean using the US bankruptcy system as a tool.

Debtors under the old bankruptcy laws remain debtors. With the new bankruptcy laws, credit counseling and financial management courses are compulsory. Education was not part of the old bankruptcy laws. After filing bankruptcy, people just go back to racking up debts in the old ways.

The old bankruptcy laws made it very easy for people to file for bankruptcy themselves or use bankruptcy filing services who are not certified bankruptcy lawyers. The new bankruptcy laws impose more regulations and as a result more fees. The new bankruptcy laws also make bankruptcy filers wait a longer period of time before filing another bankruptcy.

Old bankruptcy laws, new bankruptcy laws and homestead exemption

With the old bankruptcy laws, people filing for bankruptcy protection were taking advantage of the homestead exemption too much. In some states, people filing bankruptcy could take advantage of the homestead exemption no matter the home value. Nowadays, with the new bankruptcy laws, the state homestead exemption is:

• $125,000 for real estate acquired during the 1,215 day period before filing bankruptcy