Be Familiar With Bankruptcy, Know The Things Behind It

Filing for bankruptcy signifies that a consumer cannot afford to keep up with his financial obligations. If he’s allowed to discharge his debts through this credit-busting option, he can look forward to having a fresh, new start.

Still, it is worth mentioning that it is no longer easy to apply and qualify for either a Chapter 7 or a Chapter 13 Bankruptcy. After all, certain amendments to the bankruptcy laws, which took effect starting August 2009, will surely discourage consumers from signing up for this program. Let’s tackle about some of these changes, today.

[Article:  Possible Reasons Why People File for Bankruptcy]

Requirements on Bankruptcy Filing

In the past, anyone can simply file for bankruptcy and wait to get approved. Today, an individual must first complete a credit counseling course with a government accredited agency at least 6 months before he can file for bankruptcy. If the counseling agency recommends bankruptcy as the next step, that’s the only time a consumer can start filing.

What is this rule implement? It is to lessen the number of bankruptcy cases filed each year. Since some people use bankruptcy as a way to escape from their responsibilities, going through a credit counseling course would ensure that other possible solutions have been considered to help a consumer get out of debt.

[Article:  Tips In Filing for Bankruptcy In the United States]

Bankruptcy and Bankruptcy Attorneys

Under the new law, lawyers are responsible to ensure that all the information provided in the bankruptcy documents are true and accurate. Understandably, many lawyers or attorneys who specialize in bankruptcy cases have raised fees for their services. If you are contemplating bankruptcy, don’t forget to consider the costs.

 

Chapter 7 or 13?

A bankruptcy applicant must go through the “income Means Test” in order to determine whether he is qualified for a Chapter 13 bankruptcy or a Chapter 7. Remember that a Chapter 7 bankruptcy discharges the borrower from all debts while a Chapter 13 puts the borrower under a 5-year repayment plan.

If your income happens to be above the standard requirement, that means you are still capable to pay off your debts. Under the 5-year repayment program, a percentage of cash would be automatically deducted from your salary each month and sent as payment to corresponding creditors. For a complete information on the new bankruptcy process, visit the FTC’s website.

view 2009 resources for Debt Consolidation Companies

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

3 Comments
  1. Chapter 7 wipes out all debt you have, but is harder to file for now. It is based upon income. If the court deems you have enough income to make a payment structure, you may be eliminated from filing chapter 7. A Co-worker of mine tried to file Chapter 7 and was denied because they said he made plenty to cover his debts.

    Chapter 13 is kind of like a re-structure, where they just get your bills reduced and you still have to pay them.

    The new Bankruptcy laws have made it harder for people to just file Bankruptcy

  2. Someone I know is filing for bankruptcy. I was wondering if there were any effects that bankruptcy would have on her as far as credit. Does bankruptcy go on any kind of personal record? I’m just wondering if she’ll always have to worry that filing bankruptcy will effect her credit permanently or any other issues throughout her life?

  3. Thanks for explaining that chapters 7 and 13 are the most common forms of bankruptcy procedures. I have a friend who would like to retire his business soon because it hasn’t been profiting in quite a long while now. Going bankrupt might be his way out since he still has to deal with outstanding debts.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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