Wednesday, August 13, 2008

Until Just A Few Years Ago, Filing For Bankruptcy Was Fairly Easy

Category: Finance, Credit.

Until just a few years ago, filing for bankruptcy was fairly easy. When Congress changed the nation's bankruptcy laws in 2005, many debtors found the new" Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, " to be more hindrance than help in overcoming past mistakes and starting anew.



Not anymore. The new law is stricter, featuring more requirements than ever before. Chapter 7 Filings: Under the new law, it is no longer your right to be allowed to file Chapter 7 bankruptcy. It is important for anyone considering filing bankruptcy to understand the following: Credit Counseling: It doesn' t matter whether you file for Chapter 7 bankruptcy that discharges your debt or Chapter 13 bankruptcy which enters you into a repayment plan with creditors, anyone filing bankruptcy is required by law to attend credit counseling by a court- approved counseling service. If, after proving your income the court determines that you make more than the medium income within your state, you may be required to file Chapter 13 bankruptcy instead and enter into a repayment schedule to pay back all( or most) of your creditors. The amounts you must repay each month are calculated according to specialized guidelines that take into account your income in the last year( not what you make now) , and your assets. Chapter 13: It is not uncommon to find your repayment schedule a bit more than you can financially handle under a Chapter 13 filing.


Residency: While everyone must obey federal bankruptcy laws, some states offer their own, more lenient exemptions. Allowable Expenses: In the past, those filing bankruptcy could virtually erase their debt and start new in seven years, while continuing to live the lifestyle they' d grown accustomed to. The new federal law, requires residents to, however live in a specific state for a specified amount of time( usually at least two years) in order to qualify for any state- exemptions. That's no longer the case. Most are forbidden from having cell phone expenses as well as cable TV, high- speed Internet access, meals out with, movies the family, and anything else beyond the minimum allowable expenses as determined by the IRS and the courts. Under new federal bankruptcy laws, the IRS determines your monthly budget, and what you should be able to repay.


Bankruptcy isn' t what it used to be, thanks to millions of Americans who abused the system in the past. While filing for bankruptcy may have once seemed like a good way out of a bad situation, many consumers are now opting to try and fix their financial woes themselves in lieu of letting the government fix it for them. Once reserved for people in dire financial situations to help them free themselves from excess debt and start fresh, today's bankruptcy laws are designed t punish those who have been financially irresponsible and force them to pay back most or all of the debt they' ve accumulated.

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