Congress enacted a significant change in the bankruptcy laws
that took effect in October 2005. These changes do not mean that bankruptcy has been abolished. Rather, Congress has imposed an additional requirement, called a "Means Test", on debtors who seek bankruptcy relief.
For most people, the Means Test will not change the result of their bankruptcy. The Means Test simply requires that individuals who are able to pay back a significant portion of their unsecured debts do so through a Chapter 13 Plan, rather than discharging their debts through a Chapter 7 petition. While this principle does seem fair, the mechanism imposed by Congress is clumsy at best. So far, reports suggest that the Means Test only applies in about 15% of all bankruptcy cases filed. Even when the Means Test is applied, in the vast majority of cases the Debtors are still able to attain all of their aims through the bankruptcy court.
The long and short of bankruptcy reform is that bankruptcy relief is still available. For most people who find themselves in financial distress the recent changes in the Bankruptcy Code do not alter the results they will attain through the bankruptcy court. Debtors can still prevent foreclosures and repossessions, block lawsuits and judgments, and stop creditors' noxious collection activities while protecting their income and property.