New Bankruptcy Law Explained
Laws change from time to time. We will explain the new bankruptcy law here and tell you what you need to know.
Explain New Bankruptcy Law - Filing
The bankruptcy law changes have made filing bankruptcy more difficult than ever before. It has created a lot of confusion regarding eligibility for this form of debt relief.
It should come as no surprise that credit card companies actively endorsed the recent changes in the law, that made it harder to declare credit card debt bankruptcy.
New Bankruptcy Laws - Credit Counseling
One important change is that all debtors now have to go through credit counseling before they can file bankruptcy and their debts can be eliminated. This includes additional counseling on budgeting and debt management.
The new credit counseling requirements may be completed prior to filing for bankruptcy using any of the following methods:
Under the new changes, the U. S. Trustee's Office is responsible for approving bankruptcy credit counselors. They may approve a nonprofit budget and credit counseling agency or an instructional course about personal financial management if the credit counseling agency meets certain requirements.
Once the credit counseling sessions have been completed, the debtor is given a certificate of completion from the credit counseling agency. This certificate is given to the court when a bankruptcy petition is filed.
New Bankruptcy Laws - Bankruptcy Chapter 7 vs Chapter 13 Bankruptcy
Most people think of bankruptcy in terms of Chapter 7, which means almost all current debts are canceled, and after filing, they owe nothing. However, you may find that you are not eligible for bankruptcy under Chapter 7 and may be required to file Chapter 13 bankruptcy.
What does this mean for your bad credit card debt? From here on, with the new changes in the law , filing for bankruptcy will be more confusing, complicated, lengthy and costly.
It is a good idea to consult with an attorney or financial advisor to discuss any legal or financial issues involved with your credit decisions and changes in bankruptcy laws.
*** There is no need to file for bankruptcy when you can get a loan modification to make you current with the mortgage on your home.
** Some of the requirements have been eased for recent Hurricane Victims.
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