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Thought the specifics of bankruptcy reform were settled last year when Congress passed legislation and President George W. Bush signed it into law Think again. Specific aspects of America's new bankruptcy law, Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, are certain to be challenged in court, especially provisions that tend to "persuade" in penalties to advise their clients to pay off rather than walk away from their debts, according to a panelist at a recent IRS hearing. In addition, Congress is currently considering a raise in filing fees.

Counseling Debt (AXcess News)New York- Lawyer organizations are challenging the new bankruptcy law, saying it illegally restricts the advice attorneys can give and makes it harder for clients tomaneuver throughthe bankruptcy system.

The newüct contains the biggest changes to bankruptcy law in 25 years. The law makes it more difficult for people to have their debts discharged under Chapter 7 bankruptcy, bankruptcy credit counseling. All of those people who are barred under the new law from filing Chapter 7 will be forced to file Chapter 13 bankruptcy, which requires a payment plan over a period of years instead of giving a fresh start.

Consolidation Consumer Debt Thursday, a lawsuit was filed in US district court in Hartford, CT argues that the new bankruptcy law treats attorneys as if they were no more than unlicensed document preparers, which are requiredunder the new bankruptcylaw to tell clients not to go further in debt, giving specific advise only.

//www.bankruptcyaction. USbankstats.htm ^{304 //www.abiworld. 1980annual.html Many consumers who complete a bankruptcy find that bad debts that were supposed to be discharged as part of the bankruptcy are later erroneously included on credit reports. Robert Weed, an Alexandria, Virginia attorney, said he regularly must file motions in federal bankruptcy court in order to get creditors to stop reporting discharged debts and to get the credit reporting agencies to remove them.}

Debt Settlement The lawsuit in Hartford's US district court claims the new bankruptcy law illegally hampers the attorney-client relationship. Car repairs, medical bills and court-ordered child support are listed in the lawsuit as examples of added debt that might keep clients working and out of jail. In some cases, lawyers say borrowing against a 401(k) retirement plan or accessing a home equity line of credit might make sense. But under the current bankruptcy law, attorneys are not permitted to advise their clients on matters like these.

On March 10, 2005, the Senate passed S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. President Bush signed the bill into law, which became effective on October 17, 2005. The following summary discusses changes in the consumer bankruptcy law affected by the bill. Unless otherwise noted, all references are to the United States Bankruptcy Code (“Code”). Either directly or indirectly, the content of the new law will have a material effect on consumer debt, real property transactions and home ownership.

Debt Free "The statute injects the government directly into the heart of the attorney-client relationship in a way that would be both grave and unprecedented," the lawsuit states.

With the change in the new bankruptcy law effective October 2005, it is now necessary for consumers to get credit counseling within the six months before filing bankruptcy. The credit counseling service must be from a government approved credit and debt counseling organization. //www.usdoj. cc_approved.htm

Consolidation Debt Service The Justice Department was looking into the lawsuit Friday morning.

Company Consolidation Debt The Connecticut Bar Association and the National Association of Consumer Bankruptcy Attorneys asked a judge to temporarily rule that attorneys are not covered by the provisions until the case is settled, AP reports.

Consolidation Debt Online Other provisions challenged in the lawsuit include requirements that agencies provide standardized legal advice forms and contracts for their clients and advertise themselves as "debt relief agencies." Attorneys say those restrictions should not apply to them.

Consolidation Debt Free No ruling has been made and no hearings have been scheduled.

Debt Problem The new law, the most sweeping overhaul of the U.S. Bankruptcy Code in a generation, took effect in October. It bars those with above-average incomes from Chapter 7 -- where debts can be wiped out entirely -- except under special circumstances.

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