Bankruptcy Laws In 2005 the U.S. was implemented with new bankruptcy laws that passed congress. Before that time, filing for chapter 7 bankruptcies was an easy way out of financial obligations. Many people spent years being careless with their credit and debts because it could be fixed with a quick filing for bankruptcy. Now that the law has changed, there are more restrictions for filing a chapter 7. Before the 2005 revision, filers could choose which code they wanted to file under. Income did not matter. One of the biggest changes is that now those with a higher income will have to file under chapter 13 and therefore pay off some of their incurred debt. The law also imposed new restrictions on bankruptcy lawyers. It may be tougher now to find a lawyer who will represent you in a bankruptcy case. In addition to the new income restrictions, there is also mandatory counseling that debtors must complete before and after filing for chapter 7 bankruptcy. Pre-filing, individuals must complete credit counseling and post-filing, they must complete financial budgeting. These should have been implemented years before. They are designed to keep people aware of their spending and keep them on track. There is also a change for chapter 13 filers. There is also a new income demand. All disposable income left after paying actual living expenses must now go into their repayment plan. The IRS now determines the allowed actual living expenses, not the actual living expenses, if their income is higher than the median income in their state.