Bankruptcy Law Changes
Under pressure from retailers and other companies claiming losses from increased bankruptcy filings, congress took steps a few years ago to make it more difficult for individuals to file for bankruptcy. Initially, bankruptcy laws were designed to help people, whose financial debt got out of control and were meant to be a method of giving them a new start.
However, over the years many were taking advantage of the bankruptcy laws to continually file bankruptcy as often as allowed by law to get out of paying their financial obligations. This overuse of the system led to more stringent rules to protect creditors often the loser in cases with people who worked the system to their advantage. New laws were designed to prevent those from simply getting out of their obligations.
For those who fall into out-of-control debt, the bankruptcy laws exist to help them make a fresh start. Providing the need for financial and debt management as part of the bankruptcy process will provide the needed help while sifting out those individuals who use the bankruptcy laws to simply create debt and have it wiped out by the court periodically.
In most instances the laws still allow for discharging all legally dischargeable debt for those whose only way out is through bankruptcy. However, it also makes it tougher to meet the demands of the new laws. This may prevent some people from filing for bankruptcy, either Chapter 7 or Chapter 13 from seeking the help offered through bankruptcy, only making their financial life more miserable.
In 2017, the U.S. government seemed to agree with lobbyists for credit companies and determined that too many debtors were allowed to get out from under their self-created debt by filing for bankruptcy. Many were pointing to a few cases in which people with the means to make good on their obligations were simply filing for Chapter 7 bankruptcy and leaving the creditor holding the balance.
The new law, which was supposed to provide additional help to consumers in handling their credit load, also added many requirements, including the need to go through credit counseling services before filing bankruptcy. The counseling is also to provide alternatives to bankruptcy, attempting to move more people from Chapter 7 bankruptcy into a plan that will provide the creditors receiving payments through Chapter 13 filings.
The new bankruptcy laws added extra burdens for the debtor as well as the attorneys, which not only increased the amount of information collected for bankruptcy filings, but also included many new financial requirements that are beginning to resemble the current income tax code. In order to understand the new rules and regulations as well as the reporting requirements, many attorneys will need to specialize in bankruptcy.
There are also penalties in the new law for both attorneys and clients who willfully attempt to use inaccurate information in a bankruptcy petition. If a violation is found by the court, the attorney fees and client costs can be claimed by the court trustee, giving the trustees more incentive to more carefully review all filings in the court.
How Can You Avoid Bankruptcy
If your debt situation has not yet reached a point of no return, credit counseling and debt management may be the best option for you. There may be other alternatives to going bankrupt which can also help people in serious debt to make a fresh start.
Knowing some important aspects of bankruptcy can help make your debt burden much easier to manage and can help you avoid hassles in the near future. You will have to avoid missing records and bad checks to keep from adding to the bill. If it has even been in the back of your mind, you should take the steps to avoid bankruptcy.
The new law requires clients wishing to file for bankruptcy to undergo a six-month credit counseling. Texas bankruptcy law for example protects you, as a consumer, from falling into financial turmoil and is put in a situation where you can be abused by creditors.
The moment your petition is filed an automatic stay is in place that means your creditors listed in the petition must stop their collection procedures during your bankruptcy proceeding. The United States Bankruptcy Code provides the debtor an opportunity to pay back their creditors over a period of time of up to five years. The creditors are required by law to follow strictly the terms of the repayment plan.
However, as long as you have the funds, you will still be required to pay all your creditors based on a schedule determined by the bankruptcy court.
An auto loan after bankruptcy does not mean you have to have a co-signer or collateral. One option is to get an auto loan through a dealership. If you need a new automobile, obtaining a new car loan is perfect for rebuilding credit. Because the loan is secured by the vehicle, most lenders are willing to give loans to people with a bankruptcy. You can apply for Loan with High Risk Lenders. In fact, several lenders specialize in offering loan programs to individuals who have recently filed bankruptcy.
Financially the person is haunted with higher interest rates, higher down payments, and outright rejections for many years to come. Compare fees and interest rates, as well as, repayment options and customer service. Then, when the high interest rates are added in, people find themselves in a situation where repayment is often impossible.
They rightly point out that bankruptcy costs the credit card companies billions of dollars each year and that those costs are passed on to consumers in the form of higher interest rates.
Be honest with your lawyer and do not withhold any information that is relevant to your case. Do not be afraid to interview a lawyer and leave without retaining one if you are not satisfied. When all hope is lost, a new beginning can be created with the help of a good lawyer specializing in bankruptcy, by making use of the provision of the Bankruptcy Code. Look for a certified specialist or a lawyer with significant experience in bankruptcy. Ask your lawyer questions if you do not understand something.
Trustee within 180 days of the date of the filing of a bankruptcy case. Most people will pass through a bankruptcy case and keep everything they have. In a court-supervised procedure, a court appoints a trustee who liquidates the non-exempt assets of the debtor’s estate and makes distributions to creditors.
In an orderly, court-supervised procedure, a court appointed trustee liquidates the non-exempt assets of the debtor’s estate and makes distributions to creditors. Although the debtor files a schedule C form for property claimed as exempt, the property is not exempt until the trustee files the property exemption report which actually divides the property as exempt or non-exempt.
Credit Card Debt Consolidation
Debt consolidation allows you to speed up the time for paying off your debts with lower monthly bills. Should you opt for credit card debt consolidation, you can expect to pay off your current debts in three to six years. However, keep in mind that terms and conditions can change in a debt consolidation plan.
Types of Debt Consolidation Loans
Different types of debt consolidation loans are available to you, depending on your ability to pay. For instance, there are debt consolidation loans that you can pay off in a short amount of time at lower interest rates. There are debt consolidation loans that you can pay off in a longer amount of time but at a higher interest rate.
The interest rates of debt consolidation loans are also variable. For instance, with a variable rate debt consolidation loan, you can make extra repayments anytime without extra cost. However, with a fixed rate debt consolidation loan, you can only pay fixed repayments for the duration of the loan.
Go with the Lowest Available Interest Rate
Many consolidation loan applicants face the problem of not getting the lowest available interest rate. Thus, before signing off with a debt consolidation agency, make sure that the new interest rate on the consolidation loan is indeed lower than the interest rate you are paying to your creditors. Ensure, too, that you can secure your loan with something, such as your house for instance.
To determine if the new interest rate you are being offered on a consolidation loan is indeed better than the current interest rates from your creditors, calculate the interest and fees of your existing accounts. This will give you the total payments you are currently making. Compare this figure with the consolidation loan amount. A good debt consolidation plan will offer you a lower figure.
Tips to Remember When You are Under a Consolidation Loan
As with any type of loan, make timely payments if you are already under a consolidation loan. You should make your credit payments to your consolidation company because they are responsible for dividing the amount and determining how much goes to each of your creditors.
Making payments on time gives your creditors the impression that you are serious about paying off your debts. Avoid delayed payments or worse, skipping them, as this can prompt your creditors to go back to normal collection activities. Even worse, your creditors can put you back on the regular interest rates and fees.
Keep in constant touch with your consolidation representative. Your account may be turned over to a collection agency so it’s wise to keep your agent updated regarding any changes on your account. This way your agent can work with you and help you solve any problems that may crop up.
Keep an eye out on the monthly statements sent by your creditors and see if the rates have been reduced. Once you are under a debt consolidation plan, your creditors should stop charging you for late fees. Also make sure that your debt consolidation company is paying your creditors the right amount.