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Be Familiar With Bankruptcy, Know The Things Behind ItA person who declares bankruptcy admits his incapacity to keep up with his paymentobligations to his creditors. Once a person has been approved for bankruptcy, he will bedischarged from the debts he owe his creditors.Many people who are confronted with bad debt consider bankruptcy as a solution to their  problem. In some cases, filing for bankruptcy could be the only practical step to take butthis isn’t always the case.In 2005, the bankruptcy law was amended and major changes in the bankruptcy processhave taken place. Let’s discuss some of these changes:
Requirements on Bankruptcy Filing
In the past, anyone can simply file for bankruptcy and wait to get approved. Today, anindividual must first complete a credit counseling course with a government accreditedagency at least 6 months before he can file for bankruptcy. If the counseling agencyrecommends 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 eachyear. 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.
Bankruptcy and Bankruptcy Attorneys
Under the new law, lawyers are responsible to ensure that all the information provided inthe bankruptcy documents are true and accurate. Understandably, many lawyers or attorneys who specialize in bankruptcy cases have raised fees for their services. If youare 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 determinewhether he is qualified for a Chapter 13 bankruptcy or a Chapter 7. Remember that aChapter 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 stillcapable to pay off your debts. Under the 5-year repayment program, a percentage of cashwould be automatically deducted from your salary each month and sent as payment tocorresponding creditors. For a complete information on the new bankruptcy process, visitthe FTC’s website.
About the Author
Melanie Mathis is a credit analyst and a writer for 8 years. She has been participating in the programs of NHBS, Inc such as their continuous effort in giving
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