Bankruptcy is essentially the same as ever—the preference by society to give insolvents a "fresh start" rather than "debtors’ prison" or “debt slavery.”

A comprehensive set of federal laws passed in 2005 have brought changes--some favorable some not.

Principal changes:

• Big increase in the protection of your house--a couple is now allowed more than $100,000 of equity in their house. This also means lower Chapter 13 payments to creditors.

• No luxury spending. If your income is better than half the population, you are only allowed IRS spending guidelines in showing your expenses. A special test is now used (Form 22) If a Chapter 7 "fails" this test, you may have to file a Chapter 13 and pay a minimum of ten cents on the dollar to your creditors.

• Documentation and proof, such as tax returns, pay stubs and property ownership documents, have become crucial.

• Special duties. You must complete Credit Counseling before and after filing (cost: around $50 per person, or $50 for a couple, which can be done by phone or internet and often takes an hour or less.) You must also state your intention to reaffirm secured debt such as a car loan or mortgage. This means promising to pay them in full. Whether you actually do so or rescind your promise is a decision you should carefully consider with your attorney.

• Repeated Chapter 13 filings--If there have been one or more bankruptcies in the prior year you may find a new Chapter 13 bankruptcy does not stop the foreclosure on your house.