Household HSBC Watch

New rules taking effect today could shrink the number of bankruptcy lawyers and increase costs for those seeking debt relief.

But while some debtors’ attorneys say tougher filing requirements and increased liability could force them out of the field, credit counseling agencies are prepared for a boom in business.

Under the new bankruptcy law, debtors must pass a means test before being allowed to file for Chapter 7 protection. Their legal representation will be required to vouch for the client’s disclosure of income and assets, and could be penalized if the information is incorrect. The mandatory verification means added expense. One Las Vegas lawyer said he wouldn’t be surprised to see the cost of a consumer bankruptcy double once the full impact of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 is felt.