On October 17, 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) went into affect. This law was the most sweeping change ever to bankruptcy in the United States. The interesting thing about the name of the act is that it was grossly misnamed in that it does little to prevent abuse, and does even less to protect consumers. See Attorney Brett Weiss' article "How Will the New Bankruptcy Law Affect Me?" for a more complete list of changes to bankruptcy.

Despite that the law did change, do not believe the debt collectors who may tell you that bankruptcy is no longer available to you. The fact is that if you are struggling to pay your debts, you will qualify to file some form of bankruptcy.

The basic concept in bankruptcy is that the system is based on equity. That is to say that rulings in a bankruptcy court are supposed to be based on what's fair. Therefore, if you truly cannot pay your debts, it would not be fair to force you to do so. BAPCPA may disqualify few people who may have qualified for a Chapter 7 bankruptcy before the law changed, but Chapter 13 bankruptcy is still available to almost every individual as long as the debts do not exceed certain limits -- $336,900 of unsecured debt and $1,010,650 of secured debt. (For a list of commonly used bankruptcy terms see my glossary). Under most circumstances, completing a Chapter 13 bankruptcy will eliminate most of a person's unsecured debt interest free, and in many cases, completing a Chapter 13 bankruptcy will entirely eliminate all of a person's unsecured debt without payment of any kind toward those debts.

If you think that you may need to file a bankruptcy, make an appointment with an attorney near you who actively practices bankruptcy in order to get advice that is specific to your situation.