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Prior to 2005 filing bankruptcy was considered a simple thing to do. If you got yourself into trouble financially, the thought was to go file Chapter 7 bankruptcy and erase your debt all away (with a chapter 13 bankruptcy you are put on a payment plan to pay back your creditors over time but the debts still remain). Nevertheless, this usually proves to be the furthest thing from the truth. Of course it was simple to file and in three months you received a paper in the mail telling you your debts had been discharged. Then you began to receive a slew of letters in the mail for new credit cards and other credit things that would assist you to "re-establish your credit". The trouble with that is now you are freed from old debt and take on new debt at a much higher interest rate in most cases. Ultimately this would place you right back where you started with truckloads of debt. Not to mention the lurking 10 year blemish on your credit reports. With the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 it changed the face of bankruptcy. No longer can you just walk into a courthouse and file your paperwork. Currently you need to go to a credit counselor, receive a certificate for verification that you are seeing one, and make payment arrangements with your creditors for 180 days before filing bankruptcy. You basically have to do your due diligence to get your finances in order and only employ filing as a last resort. A chapter 7 filing is also harder to get authorized by the courts. There are particular income levels that you will need to fall under. Your tax returns, pay stubs, and any other financials will be brought into court and a judge will determine if you can repay your debt inside of the next 5 years. If it is decided that you are able to repay your debt you will be put on a payment plan and will have moved into a Chapter 13 bankruptcy. This makes it tougher for consumers who want to rack up debt and then not pay just because. The law has been established for those who actually require it and for protection of you and creditors. If you are evaluating filing for bankruptcy you should first gather all your financial data and start getting hold of a local consumer credit agency and getting a free (in most cases) consultation. They can let you know what your best alternatives are. With individuals losing their jobs everyday and eliminating any and all savings it is reasonable that paying a creditor may take a lower priority to setting food on the table. You should constantly try and talk with your creditors. Do not avoid phone calls or leave unread mail laying around the house. A creditor might be happy to arrange the easiest payment plan with you if you just communicate. They do not win either by you not paying so they will be willing to help. So how do you know when or if it is time to file bankruptcy, or if there are other preferable options available to you? For more insights and additional information about determining if you should File Bankruptcy as well as getting a free bankruptcy evaluation from an experienced bankruptcy lawyer in your local area who understands the bankruptcy process and can let you know what to expect and what your options are, please visit our web site at http://www.bankruptcy-data.com
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