In 2005, Congress passed the “Bankruptcy Abuse Prevention and Consumer Protection Act,” at the behest of large banks in order to make it harder for individuals to file bankruptcy. The biggest change from the old law is the addition of the “means test.” In order to file bankruptcy now, debtors must prove that they make less than the median income for their state. Another change is that debtors must complete a “credit counseling course” before filing bankruptcy and must complete a further “debtor education course” before their debts are finally discharged. The stated reason for these courses is to “educate” debtors, but there is little evidence that they are at all helpful. In reality, the new law and all its’ requirements are simply designed to put more hurdles in front of people who are in desperate financial straits, a fact that was obvious within a year of the law’s passage.
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