However, before we look at the major changes that have occurred we need to explain a little bit about the different kinds of bankruptcy one can now file for.

Chapter 7 - This is the most common type of bankruptcy that a person is going to file for and for which a trustee is appointed. It is this person's job to oversee the person who has filed for bankruptcy and find the property and assets which may well be sold off by the trustee to help pay the person's creditors. In most cases after filing Chapter 7, a person will find that most of the debts (although not all) which they have incurred, will be cancelled.

Chapter 11 - Often Chapter 11 is used by businesses who wish to file for bankruptcy, but on occasions, some individuals may choose to use this as well. But it is very rare because Chapter 11 is extremely costly to file for and also is very complex to deal with. Plus the only people who are likely to use this form of bankruptcy filing are those as individuals whose debts are above the limits set for a Chapter 13 filing (which we look at next). But for a business who files for Chapter 11 it, means that they are still able to operate as a going concern yet are sheltered from some of its debts as well.

Chapter 13 - Through a Chapter 13 a person will come up with a proposed repayment plan to pay back all their creditors. The court will then appoint a trustee just as they do with a Chapter 7 and it is this person who will collect the payments from the person who has filed a Chapter 13 and then pay these to the creditors. The main role of the trustee appointed to a Chapter 13 bankruptcy filing is to ensure that the person complies with the repayment plan that has been put in place at all times. Note that in this case, your debts are not wiped out.

Now we have looked at some of the kinds of bankruptcy that one can file for we are now going to take a look at the changes that have occurred in the bankruptcy law. The most important change to take place is with regard to who can actually apply for bankruptcy using Chapter 7. The changes in the law now prohibit those who have a much higher income from actually using Chapter 7.

Before a person is actually able to file for Chapter 7, they will first have to undergo a means test to see what their income actually is in relation to the state's median. If it is found that their income is higher than this, then they will instead have to file a Chapter 13.

Also with the new bankruptcy law, all those who owe money will need to get credit counseling before they can actually file a bankruptcy case. Plus you will also need to undergo additional counseling with regards to budgeting and how to best manage your debts before they can actually be wiped out or assets liquidated.