New bankruptcy laws have a “one size fits all” mentality that could spell trouble for individuals trying to file for personal bankruptcy.

The new law uses a litmus test based upon IRS standards and not actual living expenses. You may have special needs (such as a special diet or medications) that do not fit into the IRS set standard of living. For this reason, you might not meet the requirements to file for bankruptcy.

The same applies to rent, car, and all other living expenses and may even require an attorney's fee to litigate extended circumstances. Your prior six months income is used to determine what repayment schedule might be in order even if that income no longer exists.

The new law creates a guilty until proven innocent ideology with criminal punishment available in some circumstances for debtors filing in bad faith. Penalties are mandatory against all debtors (or their attorneys) who claim facts, pleadings or requests without “substantial justification.”

Innocent errors, oversights or omissions are not excluded. This zero-tolerance provision does not apply to creditors. Any creditor can contend misconduct or request dismissal at anytime. Dismissal then becomes mandatory, without judicial discretion, unless a debtor proves compliance with all legal requirements for bankruptcy protection.

This basically means that creditors have the right of way in almost all cases.

The new bankruptcy law will also require all debtors to obtain pre-bankruptcy credit counseling as a condition of filing eligibility and post-bankruptcy education as a condition for discharge. Debtors will be required to file a certificate from an approved non-profit credit counseling agency stating that the debtor has been provided a briefing on credit counseling options and assistance in conducting a budget analysis during the 180-day period prior to the bankruptcy filing.

The bill also requires debtors to complete a personal financial management course. Not completing this course can deny a discharge. Such programs are not available on any scale today nor does the law have any provision for any funding for such a program. So who will pay for this program?

Though select pre-bankruptcy counseling can occur via telephone or Internet, post counseling cannot. What about debtors in outlying areas, the homebound, or debtors who will lose wages or incur daycare costs to attend a required education program?

Having all debtors obtain counseling, even when hopelessly insolvent with no ability to form a repayment plan, does not make sense.

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