Bankruptcy Interest Increases as Deadline Approaches

Congress recently passed sweeping statute law that volition significantly reform American bankruptcy law. Designed to eliminate the “convenience bankruptcy” of compulsive gamblers and the financially irresponsible, this statute law will do it more than hard for those seeking bankruptcy protection from the tribunals to have got got their debts relieved.

Under current law, people who have debts that they cannot refund may register under Chapter 7 of the Federal Soldier bankruptcy code, which allows nearly all debts to be wiped away. The new legislation, which takes consequence in October, 2005, will necessitate most people filing for bankruptcy to register under Chapter 13 instead. Chapter 13 necessitates that a repayment program be established, usually over a time period of five years. Chapter 7 filings will still be an option, but the new statute law includes a “means test” that analyzes the filer’s income to determine whether Chapter 7 or Chapter 13 is appropriate.

With the new law set to take effect, the number of people inquiring about Chapter 7 bankruptcy filing have increased dramatically. Attorneys who specialise in bankruptcy law have got reported that their phones are ringing constantly, as people who are in financial problem are wondering if they should register for bankruptcy immediately. While this is good for business, many attorneys are a spot concerned about the sudden hastiness to register for bankruptcy.

While filing for bankruptcy may be the lone option for some people, it is not something to set about in haste. Bankruptcy remains on your credit report for a minimum of 10 years, and can your ability to obtain auto loans, mortgages or even occupations in the future, even if you have got established financial stability. Bankruptcy should not be entered into lightly, and should be considered only as a last resort. Many creditors will work with those who owe them money, and it may be possible to set up a repayment program without filing for bankruptcy.

If you experience that your financial state of affairs is serious adequate that bankruptcy is a possible option for you, you may wish to talk to a credit counsellor or bankruptcy attorney now. There are still five calendar months remaining before the new statute law takes effect; this should supply most people with ample clip to analyze their options carefully. What you should not make is haste into filing a bankruptcy request that may turn out not to be necessary. A haste to beat out a five-month deadline may stalk you for 10 old age or more, and that is the last thing you want.