New Bankruptcy Legislation Passes

The top story today on Yahoo! Finance is the passing of the new bankruptcy bill (S.256, Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) that restricts who is eligible for Chapter 7 bankruptcy, which dissolves all your debt, and instead forces people into Chapter 13, which sets up a payment plan. Some have labeled this business friend, which it is, but I contend that it’s not necessarily anti-consumer. The rules essentially say that if the person filing for bankruptcy is above the state’s median income and can pay at least $6,000 over five years must file Chapter 13 and not Chapter 7. I believe that is very reasonable especially when you figure how the debtor’s income is actually calculated (explained below).

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