Consumer protection laws: Know your rights

Law: Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, or BAPCPA, amends Truth in Lending Act

What it covers: Bankruptcy, debt counseling

What it does for consumers: The BACPA sets disclosure rules for repayment schedules and bankruptcy assistance services. Holds petition preparers, lawyers and debt relief agencies liable for fraud and negligence.

• Prohibits bankruptcy petition preparers from giving legal advice.
• Imposes heavy fines on bankruptcy petition preparers who violate the law or advise debtors to do something that breaks the law, such as supplying a bogus Social Security number on the petition.
• Bars debt relief agencies from misrepresenting or not following through on services offered to debtors.
• Requires debt relief agencies to give debtors notice of necessary documentation to file a bankruptcy petition. They must also include a separate statement titled, "IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER."
• Creditors must halt their collection efforts once a debtor files a petition for bankruptcy.
• Can enforce a 20 percent principal debt reduction on unsecured debts if the creditors refuse to negotiate a repayment plan with a credit counseling agency.
• Mandates that consumers who opt for repayment plans receive full disclosure of the repayment schedule and have some time to rethink the plan.
• Funds held in retirement plans and children's savings accounts are not considered as assets.
• Former spouses in bankruptcy can't discharge child support and alimony payments.

Consumers facing or considering bankruptcy should know that the law also makes filing for bankruptcy -- especially Chapter 7 -- more difficult and costly. For more information, read the Bankrate feature, "What is bankruptcy?"

To file a complaint about debtor education providers or credit counseling agencies, visit the U.S. Trustee Program's Web site.

Access the full text of the law here.