The New Bankruptcy Code Amendments

Any person attempting to qualify for Chapter 7 after the implementation of the new Bankruptcy Code changes now appreciates the influence of credit card companies over lawmakers. Credit card debts once constituted the bulk of unsecured debts discharged in Chapter 7 cases. But the new bankruptcy code specifically includes a formulaic exclusion based on the comparison of income earned to total unsecured debt subject to discharge.

After 11 years of intense lobbying, and countless proposed bills drafted by special interest groups, the Republican majority in the Senate passed S. Bill 256. The bill was ratified by Congress and approved by the President in the spring of 2005. The new Bankruptcy Code became effective, by operation of law, October 17, 2005. As a result, permission for wage earners filing bankruptcy Chapter 7 is almost entirely eliminated except in extraordinary circumstances.