Consumer Reports: What the new Bankruptcy Law Means for You

Life is about to get a lot tougher for people who get in over their heads with debt. When the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 takes effect, which is expected to be in October, it will be harder to erase debts and make a fresh start.

The idea behind the law is to get tapped-out consumers to pay back more of the money they owe to credit-card companies, banks and other lenders. But even borrowers nowhere near bankruptcy should consider the ramifications of the new law. In today’s volatile economy, growing job insecurity combined with skyrocketing health-care costs and a frayed social safety net can easily send even a prudent consumer off a financial cliff.

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