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I discussed the new bankruptcy bill passed into law ^[3] back in March and the time has come for it to take effect. The spirit of the bill was to prevent anyone from taking advantage of the bankruptcy system by overspending and then claiming bankruptcy. However, with every law, there are unintended consequences and one of them is that good faith bankruptcies will not be allowed. I think that the “means test” for Chapter 7 filings (as opposed to repayment via Chapter 13) is very fair.

You cannot file for Chapter 7 if your income is greater than your state’s median income and you’re able to repay as little as $6,000 over five years ($100/m). Your only option is Chapter 13 instead, which is a court-imposed repayment plan and not relief from your debts. The bill isn’t heartless, if you read my previous article on this bill ^[3], and has a lot of provisions for those dealing with extraordinary medical issues, those in retirement and/or on social security.

Only time will tell whether this bill was a good idea but so far I like it in spirit.