Debt Consolidation, Personal Finance NEWS

How to benefit out of the new bankruptcy law

Published by admin on January 8, 2010

How to benefit out of the new bankruptcy law

There are 2 sides to change the rules in bankruptcy.

This will be much harder to file bankruptcy under Chapter 7 and completely clean slate.

For businesses, relying on issuing credit, the new personal bankruptcy law is, reducing personal bankruptcy claims from the thousands to double figures. (On the short run).

However, lawyers that are working with the actual submission of people say that the bankruptcy new law is seriously flawed because it provides more financial burdens on the parties has occurred and reduces potential debt repayment to small businesses.

And then of course you have credit card companies charging high interest rates, which in some cases led to bankruptcy in the first place.

According to some financial experts, many people, the accumulation of debt is due to the conservation of the Joneses and not thinking ahead.

For 80% of clients advised every month, the debt is related to credit card and an average of $ 32,000 – the result of six to eight cards.

Consumer credit organizations say the new law provides for debt reduction strategy to bring those considering bankruptcy and curbs abuse.

Under the new law has become a requirement that the person filing bankruptcy to obtain credit counseling before and after filing for which the person is charged..

Now, after the consumer knows the advantages and disadvantages of bankruptcy. However, it seems, only costs for already financially stressed individual.

The people filing bankruptcy are generally not over spenders, but only faced with temporary financial disasters such as medical expenses, dismissal, divorce, gambling debts or other crises.

Before you can file bankruptcy, you have now completed the credit counseling agency approved by the Office of U.S. Trustees.

This credit counseling is intended to help you determine whether bankruptcy is appropriate.

When you have finished your bankruptcy, the law requires attending another counseling session credits.

These are the new requirements before it was law, the law does not require that person to go through counseling before or after filing bankruptcy.

Second, under the old law, a person may decide to file under Chapter 7 or Chapter 13th under the new law, the court will look at your monthly income and use means test based on the situation in which you live. If your income is less than or equal to medium income then you will be allowed to file Chapter 7, which has given a clean slate.

This medium income can vary from $ 28,000 in Missouri to $ 56,000 in Alaska.

If your income is higher, it may be forced to invest in Chapter 13, unless they can prove you do not have enough disposable income.

Under Chapter 13 you will not get a clean slate, but will have to pay your debts.

Also, your attorney must now confirm that your personal bankruptcy filing is accurate. This means more work for lawyers, with higher legal costs.

The benefits of declaring bankruptcy:

Legal protection from creditors

Care for all or most of the debt

In some cases, can lead home and car

May stop complete financial ruin

It provides a fresh start

Disadvantages of declaring bankruptcy:

Bad credit