Chapter 13 | Chapter 7 | Bankruptcy

Filing Bankruptcy More Difficult Under 2005 Law

Millions of people struggle to make ends meet each month. If debt is serious – that is, monthly bills are not being paid – filing for personal bankruptcy may be something to consider, albeit a method of last resort.

Bankruptcy is a court proceeding under a federal statue called the "Bankruptcy Code" whereby persons or other entities in financial distress receive relief from some or all of their debt. Bankruptcies are administered through a federal court called the United States Bankruptcy Court.

In 2005, the President signed into law, the Bankruptcy Abuse and Consumer Protection Act, which significantly changes the way in which individuals can declare bankruptcy as well as the steps they must take to eliminate debt. The filing process is more involved for both debtors and their attorneys.

Among the most significant changes:

  • A rule now requires consumers to get credit counseling before they file a bankruptcy case.
  • After filing, consumers must complete a financial management class to help them identify and correct what led to the bankruptcy.
  • Most bankruptcy filers will have to "reorganize" and pay back debt under Chapter 13 rather than use Chapter 7 or "liquidation," where filers are relieved from paying back most debts.
  • An individual can file separate for bankruptcy, or a husband and wife can file jointly if they both are liable on the debts involved. Before you make the decision to file, consult with an attorney to help you determine if bankruptcy is the best way for you to eliminate your debt.

Note: This information was prepared as a public service by the Illinois State Bar Association. Every effort has been made to provide accurate information at the time of publication. For the most current information, please consult your lawyer. If you need a lawyer and do not have one, visit our lawyer referral page

Please rate this article!

How useful was this article to you? Your rating will help us continue providing you with the best resources and information possible.

Click on a star to rate.

© Illinois State Bar Association
Privacy Policy | Terms and Conditions