The New Bankruptcy Laws - The Challenges

Most people have heard about the new bankruptcy laws. These new laws really paved the way for a drastic change in filing bankruptcy. With these laws, the option of filing bankruptcy has become more stiff and difficult to avail of.

Here's an overview about the new bankruptcy laws.

The rationale behind the new bankruptcy laws is to reduce cases of filing bankruptcy and to provide safety nets to creditors and debtors. Filing bankruptcyis a difficult way out to escape from paying ones debts. With that in mind the new bankruptcy laws changed the face of bankruptcy for everyone.

The new laws help to ensure people can not rush into filing bankruptcy. Now filing bankruptcy also includes getting educated which is aimed at helping to prevent filing again in the future. Additionally, some income groups are not able to file Chapter 7 bankruptcy anymore.

Thing to Consider About Filing

Filing bankruptcy is not the final solution of your financial woes. Your financial problems will still exist even after filing. All bankruptcy can give you is more flexibility in handling your debts. It will not solve your financial problems.

Advocacy is an inherent component of the new bankruptcy laws to ensure full understanding of the concept. With the counseling requirement, you will learn the right way on how to recover from your debts and how to avoid similar financial problems in the future.

Bankruptcy is hard on you and creditors. Your credit will suffer due to filing. Creditors lose money over bankruptcy That is why new laws limit who can file Chapter 7 bankruptcies which wipe away debt and instead enforce filing of Chapter 11 where debts are repaid.

Income Limits

The new bankruptcy laws require a means test which will determine the income of the filer.If the income level is deemed high enough,the filer concerned is eligible to file Chapter 7 Bankruptcy and repay debts. Lower income filers will still be able to file Chapter 7.

The means test weighs a variety of factors to determine if a person can afford to repay debts under a court sanctioned repayment process.

Counseling Requirements

The counseling requirements of the new bankruptcy laws are in place to help ensure that everyone filing bankruptcy understands the process and understands the importance of getting their personal finances under control.

The counseling sessions are required before filing and then again before the bankruptcy is finalized. Both the stages of filing and approval require counseling sessions. These are mandatory sessions regardless of the type of bankruptcy.

The new bankruptcy laws were put in place to stop abuse of the system and process. Creditors gain siginificantly from the lower number of Chapter 7 filings under these laws. Filing of Chapter 11 Bankruptcy has become a requirement.

Filing bankruptcy should always be your last recourse if all possible ways to settle your debts have been exhausted. It is something that willtaint on your credit record for a while and can prevent you from obtaining credit in the future Additionally, you can run the risk of losingassets through the process that are seized to pay off debts. Overall, though, if you are in serious debt bankruptcy may be the key to getting your finances back under control.

Tags: Debt