New bankruptcy legislation is pending and might be passed when Congress reconvenes. The following will highlight some of the major revisions and how they might impact any thoughts you might have about seeking bankruptcy protection:
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
Bankruptcy is not necessarily the best solution to credit problems.
To file bankruptcy, you must be legally declared unable to pay your debts. Often, you see advertisements promoting bankruptcy as "fast and easy", but that generally applies to the lawyer who files on your behalf, not you. Bankruptcy is not a quick fix or a way to conveniently escape ones financial commitments. It is intended for those who have no hope of ever repaying their debts or need debt restructuring in order to make their debt load become somewhat manageable. And it can negatively affect your credit rating for 7-10 years.
Those who meet chapter 7 requirements are allowed to wipe out most unsecured debt. However, if the debt is secured or something that was court ordered, chapter 7 does not let you escape your responsibility. For example, alimony and child support, secured debt like a home, properly executed titles or liens, back taxes, recently made purchases, student loans are some of the debts that are not extinguished by going through bankruptcy.
Chapter 13, or the Wage Earners Plan, allows the individual to immediately stop collection activity and restructure payments so that they are more manageable. This chapter gives the individual breathing room by forcing creditors to come to the bargaining table so that payments can be renegotiated. You will normally be discharged from this chapter in 3-5 years.
Since filing bankruptcy is a civil proceeding, it is a public event and becomes a part of your credit record, therefore you can plan on paying cash for everything for the next 7-10 years. Which means don't plan on buying a home, a car or anything else on time or with a credit card for that length of time.
Our program is intended to help you get out from under your debt load without having to take such drastic measures or make your financial problems public.
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