What Is Bankruptcy Law?
Bankruptcy is a complex set of laws that govern an individual’s and business’ ability to discharge their debts and obtain a fresh start. The bankruptcy laws had a major reform in 2005, known as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 or BAPCPA. Under the 2005 bankruptcy reform act, individuals wishing to file for bankruptcy must past a “means test,” which precludes many individuals with higher incomes from filing for a Chapter 7 bankruptcy, and forces those individuals into a Chapter 13 bankruptcy where they will be forced to pay all or part of their unsecured debt. Secured debt is a debt that has property of some sort attached to it, such as a car or home. If you default on your loan, the secured creditor can always take back the property that corresponds with your loan. Unsecured debt is debt that has no property attached to it. The most common types of unsecured debt are most credit card bills and medical or hospital bills. Bankruptcy, whether a Chapter 7
