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It is quite essential for both the debtors and creditors to understand the new bankruptcy laws in order to protect themselves from any of the uncertain future mishaps. In October 2005, US Congress has made numerous changes in bankruptcy law that has to be known by each and every person. The core reasons to make changes in existing bankruptcy law are given below.

•There was a double increment in filing of bankruptcy in the year 1995-2004.

•The credit card companies were incurring three times from the normal profits.

•Because of the bankruptcy, 80% of above 60 ages has to lose their jobs.

•People who filed for bankruptcy had the median income of $28,000.

Now let’s know systematically the new changes in the bankruptcy law.

•Those people, who file for bankruptcy, have to complete a mean test first.

•On the basis of their test, the court will decide which bankruptcy is suitable for them the most and access their actual money after paying off their required expenses.

•If their money is less than the median monthly income of a state, then they will be approved for Chapter 7 bankruptcy otherwise Chapter 13 will be approved to file for bankruptcy.

•The last but not the least part is that the court and IRS will allow their minimum monthly expenses i.e. they will decide their necessary expenses.

Do not try to take the decision in hassle for filing bankruptcy. If you have enough money or asset to pay off your debts then it is better to sell them off otherwise the thorough understanding of bankruptcy law is imperative.