Bankruptcy reform becomes law

Northwestern Financial Review, May 15-May 31, 2005

After eight years of legislative effort, bankruptcy reform finally became law on April 20, when President Bush signed the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005." The bill, lauded by the bank trade associations, makes several changes to the bankruptcy code, including establishing a means test for Chapter 7 bankruptcy, raising the priority for payments of domestic support obligations, placing limits on the homestead exemption, and requiring credit counseling prior to filing for bankruptcy.

It also enhances credit card company disclosure requirements. Although the Chapter 12 provisions of the bill become effective July 1, most of the bill becomes effective in October.