Personal BANKRUPTCY
Is Bankruptcy the Right Decision? What Chapter?
On April 20th, 2005 the bankruptcy reform act was signed into law by President Bush. This law went into affect on October 17th, 2005.
The reform legislation requires more from debtors, including pre-filing consultations with an approved consumer credit counseling service in an attempt to force consumers to pay their debts outside of bankruptcy. Additionally, in order to file, a debtor needs certification from that credit counseling agency.
An income-based "means-test" will be implemented to determine which debtors may have the ability to pay back some of their debts. Those who do not pass the means-test would be forced into a Chapter 13 bankruptcy.
In addition, more documentation from the debtor will be required, repeated filings will be discouraged, the waiting period between Chapter 7 bankruptcy filings will be extended from 6 to 8 years, and a debtor's final discharge will be subject to completing a course in financial management. These are only a few changes that occured on October 17th, 2005 when the law took affect.
The attorneys at this firm can discuss and assess your financial situation for a nominal fee in the initial consultation and suggest whether bankruptcy makes financial sense for you. While we current limit our bankruptcy practice to filing Chapter 7 (complete discharge of debt) cases, we can tell you whether your circumstances qualify and or whether other options should be considered.
Is Bankruptcy the Right Decision? What Chapter?
A good credit counselor and our attorneys will level with you when your situation requires this final stroke. Some people have no other alternative -- They've spent years borrowing from every relative just to make ends meet. Having to deal with bankruptcy in their background is a better alternative than going without food and shelter, or than even using all financial resources only to end up the same amount or more in debt. Chapter 7 gets rid of all dischargeable debt.
An amazing number of people in their 20s who filed bankruptcy for a $7,000 debt. That is not usually wise because the damage will linger long after whatever the $7,000 debt was for." Bankruptcy is an extreme solution, reserved for cases like someone on a $20,000 annual salary with a cumulative credit card debt of $50,000 or more.
If you file Chapter 7 -- exoneration of all debt -- the window is nearly 10 years. With Chapter 13 -- reorganization of debt to pay a smaller portion instead of the total owed-- that seven-year clock starts ticking after you pay off the debt. So if you need five years to get back on your feet, assume this cloud follows you for 12 years. For this reason we more often reccommend that individuals use Chapter 7 .