Under the old bankruptcy laws, most debtors chose between a liquidation proceeding under Chapter 7 of the Bankruptcy Code and a wage-earner repayment plan under Chapter 13. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), new bankruptcy law, a two-part means (income) test now determines if your are eligible for Chapter 7 or must file under Chapter 13 for relief says Los Angeles Bankruptcy Attorney Steven C. Peck.

The new law mandates that all debtors must get credit counseling with an agency approved by the United States Trustee’s office before they can file for bankruptcy. Once the bankruptcy case is over, all debtors must attend additional counseling on budgeting and debt management before bankruptcy discharge of debts can occur.

Filing for bankruptcy should always be a last resort, since it damages your credit for many years. Besides, the new bankruptcy law makes it much more expensive and time-consuming to file. Unsecured loans probably won’t provide enough money for any debt consolidation loans. So, if you are a homeowner a debt consolidation loan may provide you some relief by saving you money on interest. You may want to consider mortgage refinancing or a home equity loan (second mortgage) to pay your credit card debt and secured loans, especially if the new law for minimum payments has you considering bankruptcy.

About the Author

Attorney Steven Peck has been practicing law since 1981. A former successful business owner, Mr. Peck initially focused his legal career on business law. Within the first three years, after some colleagues and friend’s parents endured nursing home neglect and elder abuse, he continued his education to begin practicing elder law and nursing home abuse law.