New Bankruptcy Law
Chapter 7 Bankruptcy
Chapter 13 Bankruptcy
Credit Cards & Bankruptcy
How to File
Find a Local Attorney
Bankruptcy Law
If you are struggling with debt and overwhelmed by payment demands from creditors, you may wonder if filing bankruptcy is the only way out of this situation. If you are faced with this decision, it is usually recommended that other options be pursued first if at all possible. Bankruptcy is not meant to be an easy way out of debt, but a last resort action. This is even more true since the new bankruptcy laws passed in 2005, which have made filing bankruptcy more difficult than before. While filing bankruptcy is a drastic step and usually a difficult decision to make, for some it may be the only way to get back on their feet and get a fresh start.
The new bankruptcy law was passed in 2005.
New Bankruptcy Laws
The federal government passed new tax laws in 2005, called "The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005." It changed many aspects of the bankruptcy process and affects the ability of many people to file for bankruptcy. While we present an overview of many of the major changes on following pages, the best way to find out how the new laws affect your personal case is to contact a bankruptcy attorney. One thing for certain, however, is that anyone struggling with debt will have to deal with these new bankruptcy laws.
Skyrocketing Bankruptcy Filings
The amount of bankruptcies that were filed doubled from the period of 1994 to 2004. This out of control financial problem is often attributed to the ease with which consumers can obtain credit. The uncontrollable use of easy to get credit cards has become the major cause for most bankruptcy cases.
Bankruptcy and Your Credit Report
If you file for personal bankruptcy, it stays on your credit report for ten years. Your credit report contains all kinds of personal information about you that credit reporting agencies can sell to other businesses that have a legitimate need for it, including creditors, insurers, and employers. This can make it difficult to get credit, be approved for a lease, buy a home, get insurance, or even to get a job. Because the results of bankruptcy are so long-lasting and far-reaching, every effort should be made to find an alternative solution.
Alternative Solutions to Filing Bankruptcy
Before you file for bankruptcy, it is a good idea to consider bankruptcy alternatives. It is always best to do what you can to avoid filing for bankruptcy. If you look into other options first, you may find a solution that works for you. At the very least, you can be assured that you tried your best to avoid bankruptcy.
Three common alternatives to bankruptcy are contacting creditors to work out a payment plan, hiring an attorney to arrange a debt workout plan with your creditors, or getting a debt consolidation loan.
Contacting creditors and working out a payment plan is an option you can work out without hiring an attorney. Many creditors would rather work out an alternative to bankruptcy and keep you as a customer because that is more profitable and advantageous for them than if you file bankruptcy.
If you are unable to work out something on your own with your creditors, you may want to consider hiring an attorney to arrange a debt workout plan with your creditors. In this arrangement, your attorney contacts your creditors and works out a payment plan. In some cases, a reduced amount of repayment is arranged to settle the debt. In other cases, the full amount is repaid but a longer payment term is worked out.
Another alternative that works for many people to help pay off their debts is to apply for a debt consolidation loan. With a debt consolidation loan, the lender consolidates all your debts into one loan, and you make one monthly loan payment. You can shop for bankruptcy consolidation loans online. Debt consolidation lenders are very competitive and want to earn your business online, so it is beneficial to search the internet for the lender that offers the best terms and rates.
Hiring a Bankruptcy Lawyer
When you hire a bankruptcy lawyer, you want to hire an attorney that is interested in working in your best interest. This might be working out an alternative to bankruptcy or directing you to file the best type of bankruptcy in your situation. A good bankruptcy attorney will offer a first meeting free of charge and offer free advice to help determine what chapter bankruptcy you should file or if it is possible to work out a bankruptcy alternative.
If you need help finding a good and reputable bankruptcy lawyer, ask friend and family if they can recommend one. Word of mouth referrals are always the best way to find legal professionals. Other options include looking in the yellow pages of the phone book or searching the internet for bankruptcy services and bankruptcy lawyers. You can usually set up an initial appointment free of charge without making any further commitments to using their legal services, so that you can evaluate if this is the right attorney and right option for you. When you go in for your first meeting, make sure you bring a complete list of your creditors and amounts so that the attorney can offer advice based on accurate information.