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Is Bankruptcy Really The Only Choice You've Got? 

For those who feel that they are in serious financial distress, bankruptcy may have crossed their minds. Bankruptcy is not something to be taken lightly. While your debt may be wiped clean, there are far-reaching consequences for that "new freedom".
If you find that you can't seem to pay your bills every month, you may consider filing for bankruptcy. As a consumer you have two choices: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is when all your assets are sold off in order to pay all or part of your debt. With Chapter 13 bankruptcy, it's more of a debt restructuring and you will make a plan to repay part of the debt overtime to your creditors.
Your credit will be damaged if you file for bankruptcy, maybe for as much as ten years. If you apply for any credit during that time the creditor will be informed of the bankruptcy.
Previously, people have taken advantage of bankruptcy laws. They were allowed to file more than once for Chapter 7 so many used it to wipe out all their debt.
Individual states decided on what if any assets will be excused from seizure for a bankruptcy. In knowing that, people used any available cash to purchase things like cars and homes to avoid payment while still keeping their personal items. If this happens, very often the creditors would get very little back from the settlement.
This has been changed by new laws. Courts used to have free rein when it came to who could file for Chapter 7 bankruptcy. Now certain standards have to be met first. In order to be able to file for Chapter 7, your income must be below the average income of the state where you live. Your income then goes through a calculation that determines if you have enough disposable income to be able to pay back twenty-five percent of the debt owed.
More people will have to file for bankruptcy under Chapter 13. The courts will decide the amount of repayment from facts that they receive. An allowance is made for rent or mortgage, food and other relevant bills. With the new laws, the IRS regulates the value of each bill, exempts a certain amount, and payments are decided from the rest.
Lawyers are charging more than ever because declaring bankruptcy has become much more involved. The whole process will cost the client much more than before which will hopefully make them think twice about filing. Credit counseling is also required as a first step before filing bankruptcy. The counselor may be able to help you and rule out the need to file.
Bankruptcy should always be a last resort. While it will give you a clean slate, it comes at a price.

Article Source: http://www.uberarticles.com/articles

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