It used to be that bankruptcy was a relatively easy process to go through. Before the new bankruptcy law came into effect, you could file for bankruptcy relatively easily. If you had too many debts, it didn't matter what your income was, for the most part. You could simply file for bankruptcy and have your debts wiped out so that you could start fresh, and people were doing this all the time, some even every year. However, that's not true anymore. |
New bankruptcy laws have made it much more difficult to both file for bankruptcy and to prove that you qualify for bankruptcy. In addition, if you do file for bankruptcy, you have to prove absolute financial hardship and lack of income to have the slate wiped clean. Even then, you don't walk away scot-free, because you'll usually lose any unprotected assets such as your house.
Instead, new bankruptcy laws have made it necessary for those in debt to take careful stock of their financial behavior and take responsibility for it. It's still true that you can file for Chapter 7 bankruptcy (also known as "straight bankruptcy"), which allows you to completely walk away from your debts. However, you have to prove that you don't have the income to pay back your debts no matter how you slice it, AND you're going to lose unprotected assets such as your house in the process. This is because anything you owned that's not protected is going to be liquidated and turned into cash to pay back creditors whatever can be paid back.
Most consumer bankruptcies filed these days fall under what's called Chapter 13 bankruptcy. In this situation, you are called to account for your financial situation and debts, and will be required to pay them back through careful planning. If you fall into this situation, you have an income and have the ability to pay your debts back over time. You are held to account for your debts and are given a schedule by which you will pay them back to various creditors, usually over a period of several years. This is mandated by the court and you must do so. One advantage to Chapter 13 bankruptcy is that you usually get to keep such assets as your house; these would normally be liquidated in a Chapter 7 bankruptcy so that creditors could be paid back whatever monies could be squeezed out of your assets.
So you see, the new bankruptcy laws are much tougher on people than used to be true. In some cases, of course, this may not seem fair to those consumers who have gotten into debt through no fault of their own, such as because of expensive medical care. However, it can be a good thing for those consumers who have simply been financially irresponsible with credit card debt or other unnecessary debt and need to be called to account for their actions, and held responsible for them. Regardless of your feelings on the matter, though, the new bankruptcy laws are here and aren't likely to change soon. For more insights and additional information about the New Bankruptcy Law as well as getting a free bankruptcy evaluation from a qualified bankruptcy lawyer in your area, please visit our web site at http://www.bankruptcy-data.com/bankruptcy-law.php
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