New Bankruptcy Law

Bankruptcy means to discharge many of the debts held by an individual, family, or corporation, allowing debtors a fresh start in their financial affairs. There are many misunderstandings surrounding the legalities of this legal action and those considering should take time to discover as much about Bankruptcy law as possible. For example: personally filing does not usually erase child support, alimony, fines, taxes, and some student loan obligations. Another important fact to know before filing is that it costs money to file - around $185-$200, not including additional attorney fees. There are also many consequences to filing any of the chapters that protect debtors, so again, getting informed about all aspects will help in determining if this is the right decision for each unique circumstance.

When knowing the results of filing a chapter 11 or 13, those considering legal debt protection may reconsider their options. Regardless of the chapter filed, this action does stay on a credit report for ten years and after filing, it can make it harder to obtain credit and get life insurance. In some cases, having this on a credit report can hurt filers chances of getting a job. This is a serious legal maneuver and should not be used as an easy out from financial problems. With some help and discretion, there are alternatives that can be considered. Many non-profit groups offer credit counseling, and under new bankruptcy law, credit counseling is a requirement before an individual will be able to file.

Under a new bankruptcy law entitled Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Americans will have a harder time abusing this protective act originally designed to help families keep homes and items necessary to living. The new law requires anyone able to repay their debt to do so; a provision legislators hope will curb rampant abuse. Multiple types of filing are available, with two of the most common being Chapter 13 and Chapter 7.

Chapter 13 filings allow people to keep a house or a car that they would normally lose. The court approves a repayment plan to repay the debts rather than surrendering the property. Chapter 13 bankruptcy is for those who can pay off their debt in three to five years. In Chapter 7 filings, property can be sold by a court official or turned over to creditors to release the filer from the debt owed. A Chapter 7 can be filed once every eight years. A debtor typically receives a discharge of all dischargeable debts usually within four months. However under the new bankruptcy law, creditors are not required to discharge all debts, if the person will be able to make monthly payments in paying off debt.

The President said he signed the law because "America is a nation of personal responsibility where people are expected to meet their obligations." He and Congress hope that the new provisions will help all Americans including those who need help making a fresh start. The Bible also encourages Christians to be responsible. "Be not one of them that strike hands, or of them that are sureties of debts." (Proverbs 22:26)

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