Bankruptcy Law - Do You Qualify to File?

The word bankruptcy is often bandied about in cases where a person or business sees no way out of a financial mess. Thanks to people abusing one bankruptcy law or another, rules have become stringent on who qualifies to file. But before getting into those qualifications, it is important to point out that many people have no concept of what bankruptcy actually is or that there is more than one type of bankruptcy law.

Bankruptcy is a legal way to negotiate debts and work out a payment plan under the supervision of a court of law. Many people are under the impression that if they go through bankruptcy that all of their debts are forgiven and they start with a clean slate. This is simply not the case.

There are two main types of bankruptcy law - A Chapter 7 and a Chapter 13. The financial situation of the debtor depends on which path is chosen. With the Chapter 13 bankruptcy law, the debt is reorganized, often with an interest-free plan approved by the courts. This means that the debts are not forgiven; rather, they are restructured over a period of time to be paid off. The Chapter 7 bankruptcy law is often referred to the liquidation law. Under this law, most of the assets held by the person or business are sold off in order to pay off as much debt as possible.

There are a number of reasons to consider bankruptcy. One of the most common is high medical bills. Due to escalating medical costs and the fact that insurance companies are paying less on claims, many people can easily become overwhelmed. In this case, bankruptcy law can be beneficial. There are other instances where bankruptcy might seem the only alternative. Losing a job can quickly put many families on the brink of financial disaster, especially if they are living paycheck to paycheck. Filing for bankruptcy can also put a halt to those relentless calls from creditors.

Interpreting bankruptcy law can be confusing for the layperson. And when you add the stress of potential loss of a home, car or other assets, it can be almost impossible to wade through the complex details. Because new bankruptcy laws have made it tougher for people to qualify for protection, the best bet for the next course of action would be to consult with an bankruptcy attorney. They are equipped to determine the best course of action and whether filing for bankruptcy is even a viable solution. Contact a compassionate and dedicated Chapter 7 or Chapter 13 bankruptcy attorney today.

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The Latest in Bankruptcy Law News

Before the new bankruptcy laws took affect in late 2005, there was a huge spike in Chapter 7 and Chapter 11 bankruptcy filings through the courts. For a while afterwards, the new bankruptcy filings were down due to the new stringent policies that require people to seek credit counseling before filing. However, after the first quarter of 2006, the number of bankruptcy petitions is climbing once again in the courts.

While still significantly less than in years past, the new laws requiring debt counseling are really doing a number on both credit card companies and debt counseling services. The deluge of people seeking counseling for their debt is staggering and taking a toll on the resources of these credit counseling companies.

These counseling companies are encountering people who cannot even pay for the single counseling session that is required by law before filing for bankruptcy. That means that they are diverting resources that are better spent on consumers who are trying to pay off their debts and it's having a negative impact on these counseling companies.

Even credit card companies are feeling the heat from the new bankruptcy laws that were supposed to ultimately benefit them. With the rash of filings before the new bankruptcy laws take effect, the credit card companies saw the latter 2005 quarterly earnings take a nosedive. And even with the new laws and required credit counseling, they are dismayed that the bankruptcy filings are starting to rise again.

In addition, credit card companies are starting to see more charge-offs and delinquencies from consumers who will never even bother to file bankruptcy. And those that do file will end up paying only a small percentage of what they owe through Chapter 13 restructuring.

What the new bankruptcy laws are essentially doing is forcing that small percentage that can pay their debts with some help to seek a debt consolidation plan. However, it is also forcing those people in severe debt with no hope of digging themselves out to reassess their situation and file for bankruptcy. Forcing their hands is what has caused the debt counseling company dilemmas of diverting resources and attention from those who have a prayer of paying off debt.

It may be several years before the dust settles and we can see what the new laws will really do for the financial industry. In the meantime, consumers will still continue to struggle and credit card companies will seek new ways and offer deals to their customers in the hopes that bankruptcy can be avoided.

Bankruptcy Law Statistics - Debt and Filings Balancing Act Fairly Steady

The United States Federal Reserve recently put out a report on some bankruptcy law statistics that are nothing new to any of us these days. It seems that the average debt per household is at an all-time high in comparison to its discretionary income. Number crunchers for the federal government say that this is an indicator of the risks to America's financial well being.

Because the debt of consumers per household is climbing, bankruptcy law statistics indicate that the outcome could result in a larger amount of bankruptcy filings and delinquent accounts. A continuing trend of delinquency could essentially compromise the future of some money lenders in the industry.

In regards to personal bankruptcy law statistics for the past ten to fifteen years, there was quite a dip in the number of filings through the courts in the mid 1990s. From about 1995 to the late 1990s, a steady increase in the number of bankruptcy filings existed before another slight decline occurred around the dawn of the twenty-first century.

Up until the law changed, bankruptcy law statistics had a steady growth rate. Then when the new laws went into effect, there was a brief, but sharp decline, thanks to the new, strict policies. The new requirement to seek credit counseling before filing reflected that dip in the bankruptcy law statistics. Ever since then however, the slow, but constant rate of growth in bankruptcy filings continues.

Bankruptcy law statistics are showing off its true colors as time goes on. The new laws are not quite bringing the desired results both the U. S. government and credit card companies and other lenders were hoping for. In fact, after that brief decline mentioned above right after instituting the new law, bankruptcy law statistics have been steadily rising and will probably be back to the normal "business as usual" levels by the end of the year.

The required debt counseling for those declaring bankruptcy is not always effective or applicable in certain circumstances. For instance, what about those families who are normally financially responsible but struck with a death, job loss or high medical bills? Through no fault of their own, they are stuck with the only alternative – declare bankruptcy. But bankruptcy law statistics show that debt counseling will not really help them. Additional money is wasted, not only by the families, but also by the company for having to conduct the mandatory counseling meeting.

Bankruptcy law statistics illustrate that in the world of bankruptcy, business is usual. The new laws have only managed to slow down the process of filing for bankruptcy.

Bankruptcy Law Statute of Limitations

Filing for bankruptcy is a big step for anyone. For some, it means conceding defeat and for others, it is a relief from a financial burden. Regardless of what reasons you might have for filing, you should be sure and arm yourself with as much information as possible about the rules and bankruptcy law statutes of limitations.

It might be a smart move to consult with a bankruptcy attorney to learn all about the bankruptcy law statutes of limitations. Filing petitions with the courts as well as other paperwork can be a confusing process in regards to bankruptcy. Plus, keeping all the facts straight about what you can and cannot do and what is and is not covered can be a trying experience. By consulting with an attorney, they can relay all the pertinent information to you in an easily understandable format. Plus, they will take care of all that paperwork!

For the most part, according to the bankruptcy law statutes of limitations, a bankruptcy filing can stay on your credit report for up to ten years. That is a large chunk of time in a person's life. Think of all the things that can happen during that period of time - job changes, moving, having children. Every aspect of your life can be affected by the bankruptcy law statutes of limitations.

Buying a home or a car can be difficult. Obtaining reasonable insurance quotes can be tricky as some companies now use your credit history to determine your rates. Finding a new job entails a background check. Some companies will extend that background check to include your credit history. These bankruptcy law statutes of limitations can be far-reaching - both in your daily life as well as time.

Under the bankruptcy law statutes of limitations, a creditor can take up to three years to take action against you if you owe them a debt. However, when you file for bankruptcy with the courts, the countdown of those three years essentially stops and stays frozen. The bankruptcy law statutes of limitations also states that if the debt is not discharged and the bankruptcy is dismissed from a court of law, the clock starts up again right when it was frozen in time.

As you can see, interpreting the bankruptcy law statutes of limitations can be as tricky as tiptoeing through a mine field. There are some ins and outs that only an attorney might know. Therefore, if you are contemplating filing for bankruptcy, consider retaining a bankruptcy attorney to navigate those bankruptcy law statues of limitations as well as other matters. It can save you a lot of headaches in the long run!