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The new bankruptcy law has provisions that make it harder for the people in debt to file bankruptcy.

In addition to the new credit counseling requirement for all filers and the means test for chapter 7, there are other changes in the bankruptcy laws. Most of the changes will cost you money one way or the other.

There are new residency requirements. Under the old bankruptcy law, the amount of equity in your house protected from creditors was set by the state where you filed.

If you have been moving around, the exemption of the state where you lived most of the time before the two-year period is used. If you bought your house less than 40 months (that's three and a quarter years) before filing bankruptcy, or violated securities laws, or have been found guilty of certain criminal conduct, you can only exempt up to $125,000 regardless of a state's exemption. Under the new law, if information provided in your case is found to be inaccurate, the lawyer is subject to various fines and fees. If you can find a lawyer willing to take your bankruptcy case, it is going to cost you more because of the time and effort it takes the lawyer to verify your information. The president of the American Bankruptcy Institute has reported that some lawyers say they may increase their fees by 75 to 100 percent.

See 'Further Changes Brought About by the New Bankruptcy Law' for information on Chapter 13 disposable income and changes regarding personal property. There may eventually be some modifications in the law if it becomes evident it is causing more problems than it solves.

If you are allowed to file Chapter 7 bankruptcy, there are changes in how your personal property is valued. Under the old law, you could value your personal property at basically 'garage sale' prices.

Under the new bankruptcy law, you must value your property it the price it would cost to replace it retail, taking into account its age and condition.

Also, under the old bankruptcy rules, the exempt personal property you could keep under chapter 7 was determined by the laws of the state where you lived if you resided in the state for at leas three months.

Under the new law, you must live in a state for two years before filing bankruptcy in order to use the state's exemption laws.

More people will be forced to use chapter 13 bankruptcy under the new law. That sounds reasonable to a lot of us. Under the old rules, you subtracted your actual expenses from your monthly income to arrive at your disposable income. Then, instead of subtracting your actual expenses, you use allowed expense amounts set by the IRS. These amounts are often lower than your actual costs. That means more chapter 13 bankruptcy plans will fail. The new law limits debt relief if you are filing after a prior case was dismissed. It would probably be a good idea to consult a lawyer before you file.



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