The New Bankruptcy Laws – How Do They Impact You?

June 30, 2009 by  Filed under: Bankruptcy 

Within the past couple of years, new bankruptcy laws have been put into place. These laws make some sweeping changes to the old laws, and in some places, certain regulations were completely revamped and almost rewritten. The reason for this change was because people were taking advantage of the old laws in a big way. For example, you used to be able to file bankruptcy almost on a whim, and you could do so frequently, which meant that many people would file, then get themselves into financial trouble again in very short order, then repeat the whole process.

This type of abuse is no longer possible with the new bankruptcy laws. But the laws were put into place for a reason, and for the person who has a legitimate need to file, these laws might seem cumbersome but they are actually to your advantage. Perhaps not in all cases, but learning to work within the laws can make the whole process much easier for you.

First of all, you need to know exactly where you are financially. Too many people think bankruptcy is their only way out of a tough financial situation and have not taken the time or put forth the effort to thoroughly check out their options and alternatives. You can do this easily and inexpensively (in many cases, free) via a bankruptcy evaluation from a qualified lawyer who understands the process and the laws in your state.

With the new bankruptcy laws, there is a time period during which if you have declared bankruptcy in the past, you cannot file again. This time period varies from state to state but it is definitely not whenever you want. There are also certain types of debts that cannot be eliminated by bankruptcy, like tax liens, child support, and previously filed judgments against you from an irritable creditor.

Bankruptcy does not necessarily mean that all your debts will be wiped out, although that is what most people hope will be the outcome. Rather, the courts take a detailed look at your finances and then decide which chapter of bankruptcy you may file for. If the decision is Chapter 13, then your debts are not wiped out but they are “reorganized” with lower monthly payments, but you are still required to pay them. If you are approved for Chapter 7, then your debts that are eligible are wiped out.

But again, this is not your decision. This is another reason that it is well worth your time and perhaps even expense to be represented by a qualified bankruptcy attorney who understands these issues and knows how to present your finances to the court in a light that may render the decision you wish to receive.

Bottom line: get a bankruptcy evaluation and fully understand what your options and alternatives are, and if bankruptcy is it, then you can also understand what to expect, which will enable you to make an intelligent decision as to whether or not you should proceed with it or not.

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