New Bankruptcy Laws – Why To Think Twice Before You File Bankruptcy
At one point, filing bankruptcy was extremely easy, and generally hassles free. To begin with, the bankruptcy law was established to offer a new beginning to those who had financial difficulties. In April 2005, Congress made extensive changes in U.S. bankruptcy law with effect from October 17, 2005. Called the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005," it spells trouble for Americans struggling with debt problems.
This new bankruptcy law and thanks to those who abused the privilege, new bankruptcy laws are stricter and have more requirements than ever before.
Some Facts on Bankruptcy
1. Between 1995 and 2004, bankruptcy filings doubled, while in that same period, credit card industry profits tripled.
2. For people 60 or older, 85% of bankruptcies are caused by medical bills or loss of job.
3. A divorced woman is 250% more likely to file bankruptcy than a married woman.
4. Approximately half of all bankruptcies are filed because of medical expenses due to lack of health insurance and inadequate coverage.
5. The median income of bankruptcy filers is $27,000.
Here is a look at some of the changes within the new bankruptcy law and how these changes may affect your decision to file bankruptcy.
Bankruptcy Law – Credit Counseling
Now, with the new bankruptcy laws, no matter rather you decide to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, you are now required to attend credit counseling. This must be done before you go to file for the bankruptcy, by a court approved credit counseling center.
You need to obtain a certificate and in some cases, a repayment plan. You will then have to submit all of this to the courts, as proof you have met the requirements under the new bankruptcy law.
After filing bankruptcy, you will then be required to submit a certificate showing that you have attended credit counseling, yet again, learning to manage your personal finances.
New Bankruptcy Law – Chapter 7 Filings
The requirements for filing a Chapter 7 bankruptcy have also changed. Now, thanks to the changes in the laws, you have to prove your income. If you have a higher income than stated by the median income within your state, you will likely have to file a Chapter 13 bankruptcy instead of a Chapter 7.
You will also be required to take what is called a means test. This is used to determine rather you are capable of making repayments under a Chapter 13 repayment plan bankruptcy.
Bankruptcy Law – Chapter 13
Now, with the new bankruptcy law, you may find, if you have to file for Chapter 13 bankruptcy, that you are paying more than you can comfortably live with. There are specific guidelines to calculating how much you have in disposable income and assets. This will depend on your income for the last six months before you filed bankruptcy and not your current income.
What is more, property value will be regarded with its real value, what a store might be able to get for that property. What this means, with the new bankruptcy law, is that depreciation is taken into consideration, which will include the condition and age of the property being sold.
New Bankruptcy Law – Residency
The new changes in law require certain residency stipulations that were not required before or are stricter. You see, states have homestead exemption, meaning that certain laws apply to residence of that state. However, now with the new law, the residency requirements increase from three months to two years, before these laws can apply to filers.
The worst aspect of the new bill is the use of IRS "allowable" expense schedules for determining your monthly budget. In short, people attempting to file bankruptcy are in for an extremely rude shock. No more cell phones, cable TV, high-speed Internet access, movies, meals out with the family, and anything else beyond the minimum allowable expenses as determined by the IRS and the courts.
Hundreds of thousands of Americans are going to discover the reality of this tough new bankruptcy law, and they are going to forgo the court system of filing bankruptcy in exchange of out of court settlement. Banks are also eager to settle with consumers for 50 cents on the dollar or less as it is beneficial for them because of following reasons:
a. Lump-sum of 30-50% today is far better than the same amount collected over 3 to 5 years.
b. Under Chapter 13, it will take the creditors 3 to 5 years to recover that 30-50%.
It is important to understand the new bankruptcy laws and how they apply to you before you file bankruptcy in any state. Make sure you do your homework and know what is best for you before you file.
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To control the negative impact of bankruptcy on the American economy and public; the government altered the rules and regulation of filing insolvency. The new laws had made it harder for a potential bankruptcy filer to file for it.
Massachusetts bankruptcy remains as one of the legal ways to get rid of your debt; a mechanism to wipe the slate clean and start afresh.
New Law for bankruptcy are lenient and because of this leniency customers start doing frauds in banking system in the conditions and purchase on credit that they didn't fill.
Debt settlement is different. This is a good way for anyone who is desperate to break free from a lot of debt to get out of it. This can cut what you owe enormously and get you out of a mountain of debt and erase credit card debt for good.
Bankruptcy cases in the US are a common activity and therefore, a well qualified attorney or a lawyer is hired so that the legal process of the case is carried out in a smooth manner.
One of the main hurdles that most individuals have to get over when it comes to achieving financial freedom is personal debt. There are a number of things that can help you to create financial obligations for yourself--and there are also a few ways to keep your money in order so that you can become eligible for the major purchases you've always wanted.
Do you have a tough time getting debts from your customers? Maybe it's about time to employ a collection agency in Los Angeles. This will deliver much more convenience on your company's debt managing.
Debt is technically the amount of money owed to a company, person or association. It can be a form of services, goods or cash. Debt can be represented by secured and unsecured loans such as credit card, personal loan and car loans.
Debts refer to amounts owed to someone or to a company. Unsecured loans usually spin out of control and lead to multiple debts. People have a hard time avoiding getting credit cards and applying for loans because of the various companies that offer low interests.
The debt consolidation process is usually sought after by people that are trying to avoid filing for bankruptcy while settling all their outstanding balances. This is traditionally a process offered by specific lending institutions that take all outstanding balances and roll them into one affordable and lump sum balance.
You must know that credible credit counseling companies are always registered with the debt relief networks so; you can trust them without any doubt. The Guidelines of association of settlement companies can be effectively used for this purpose.
They negotiate with their creditors on behalf their clients to get reductions in their debts on a reducing rate and paying the left over amount in lump sum. Once the negotiation is finalized, the debtors will be able to get relief from their heavy debts.
This was just a brief debt settlement negotiation info that will prove useful for you.
When the American economy dwindled down to fight for existence by the blow of recession, thousands of consumers lost their jobs. It is because of this reason that they became defaulters and failed to repay their debts. It was then that the already crafted debt settlement stepped forward to rescue the troubled consumers by eliminating the unsecured loans by up to 70%.
They arrange with the bank to recognize an amount which the borrower can handle as his monthly payments. They take this money from borrower as monthly payment which is deposited with the bank. Their account is stopped for any more purchase so that no more debt can be amassed.
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