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Even with the new bankruptcy laws, filing for bankruptcy can provide some advantages, if done correctly in the right situations. Bankruptcy has historically been viewed as a financial mechanism where one can wipe the slate clean and start over, based on mountains of financial obligations that are seemingly too high to ever be paid in full.

The new bankruptcy laws make this process much more difficult than it used to be. One big reason that the new bankruptcy laws were put into place is because, like almost anything else where there can be a consumer benefit derived from it, maybe people were abusing the bankruptcy system. They would amass a huge pile of debt, then file bankruptcy to wipe their financial slate clean, then start over at the same place and do the same thing over and over again. Such a scenario is no longer possible with the new bankruptcy laws.

Some things do not change. If you have financial obligations and do not pay them, either as a consumer or as a business, there are things that the creditor can do, which of course includes the harassing calls, just short of downright “threatening” in nature, that you may have received or may even be receiving today. If the payments are not made or some alternative and mutually agreeable situation is not worked out, then the creditor has every legal right to name you in a lawsuit. Such lawsuits are common and are designed to protect the creditor who gave money, goods, or services in good faith that he would indeed be repaid.

You do not want or need the stress that accompanies umpteen phone calls on a regular basis from the collections department of your creditors, with each call being less friendly than the last one. You already know what kind of financial situation you are in, and their constant hounding only serves as a reminder of that a reminder that you probably do not need, which only serves to increase your stress level.

After you have filed your bankruptcy petition in federal bankruptcy court, you are given automatic protection from creditors. If a creditor calls you after you have filed your bankruptcy petition, you must tell them that you filed for bankruptcy and can even give them the case number, although you are not required to do anything more than to let them know that you filed bankruptcy. Since bankruptcy case records are open to the public, your creditor can easily enough find out your case number anyway.

If a creditor calls you after being told that you have filed bankruptcy, be very nice about it, and get their name, their phone number, the date and time of the call, and what creditor they are representing. Now you have some clout because that creditor is in violation of federal law. There have been some cases where a consumer’s debt with a creditor in this situation was wiped clean because the consumer now has every right to file a suit against that creditor for his violation of federal law.

Yes, there are some advantages to filing for bankruptcy, although bankruptcy should still be viewed as your last resort option, used only after all other viable options and alternatives have been exhausted.

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Is there a bright side to bankruptcy? Yes there is, although bankruptcy should still be considered your option of last resort, and the bankruptcy option only employed after you have thoroughly investigated all other options and alternatives. There are many downsides to filing bankruptcy, not the least of which is that this will become a huge red flag on your credit report for the next seven to ten years.

But sometimes bankruptcy is the best option in a given situation and if that is the case, you need to understand that there are bright sides to bankruptcy. Keep in mind that, especially with the new bankruptcy laws, one cannot file for bankruptcy on a whim, nor can it be done if you have already declared bankruptcy in recent years. The bankruptcy court needs to APPROVE your bankruptcy before things can move forward, and that approval is not nearly as automatic as it once was. Yes, after looking in your particular financial situation in a great amount of detail, the court may actually decide that you are not eligible to file bankruptcy, and you have to seek another option out of your financial difficulties.

One of the bright sides of bankruptcy, if you are approved to be able to file, is that the harassing phone calls from your creditors come to a screeching halt. But here is where it gets tricky because you also have some responsibilities here. After you have filed your bankruptcy petition and it is approved by the bankruptcy court, knowledge of this fact is not known to your creditors automatically. So the next time they call after your bankruptcy has been approved, keep track of the information. Write down the date and time of the call, which creditor it is, the name of the collections agency, and the name of the individual calling. Let them know that you have filed bankruptcy. By federal law, that stops calls from that creditor.

The reason for keeping a notebook handy where you record this information is so that if a creditor calls again who has already been told that you have filed bankruptcy, again write down the name, phone number, name of the person and name of the creditor as well as date and time of the call. With that information in hand, you can inform the creditor that they are now in violation of federal law. The ball is now in your court. There have been cases where a creditor continued to call after being informed that you had declared bankruptcy, and as a result, the consumer filed a countersuit against that creditor for their continued calls, and the debt from that creditor was wiped clean!

Another bright side to bankruptcy is your potential ability to start over with a clean slate and no financial obligations. Getting new credit is going to be difficult and you will have to spend time getting things like a personal loan, car loan, or even a mortgage, but it can be done. But since your credit report will show your bankruptcy filing clearly, be aware that it will be a longer row to hoe than it previously was.

If you file bankruptcy under the Chapter 7 regulations, you will need to demonstrate and prove that you are unable to pay even a portion of your outstanding debts. If this can be proven to the court’s satisfaction, your slate will be wiped clean.

The decision to file bankruptcy is not an easy one to make, and again, you are encouraged to examine all your options and alternatives. But if bankruptcy is your most viable option, make sure you understand the bankruptcy laws and have a bankruptcy attorney who understands them, because you don’t want to risk making a bad situation worse.

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If you think that you have nothing now, the new bankruptcy laws could even shrink that! The new bankruptcy law overhauls the laws that were modified in 1978. It not only tightens the requirements for those who want to file for bankruptcy but for their attorneys as well.

These are several of the major changes that were initiated under the new bankruptcy law:

• Means Test You now have to show that you are not abusing the use of bankruptcy. This test calculates what you make per month minus certain expenses that are allowed. The median income will vary from state to state. If you fail the means test, then you must file for Chapter 13 bankruptcy.
• Expense allowances Guidelines are put forth by the IRS for allowable expenses, and they are stingy. The food allowance is approximately $200 a month, and the housing allowance is approximate $800 a month.
• Residency requirements There are state and federal bankruptcy laws, and some state laws are more lenient than others. Texas and Florida have very generous homestead allowances. The new bankruptcy law discourages you to look around for the best deal. You are not permitted to file for bankruptcy in a more favorable state unless you have resided there for a minimum of two years.
• Mandatory credit counseling Another change that came with the new bankruptcy law is that you have to take a credit counseling course that has been approved within 180 days of filing for bankruptcy. Sorry to say, this is not a free course. The cost of this course is approximately $75.00.
• More paperwork In order to prove that bankruptcy is necessary, the consumer will have to present much more documentation. Such things a debtor must provide are: a list of all unsecured and secured creditors, proof of taking the credit counseling course, a detailed list of ones expenses and monthly income, liabilities and assets, the most recent tax return, photo ID and pay stubs.
• Hefty legal fees A bankruptcy attorney must now certify that their clients figures are accurate. If they prove not to be, the lawyer as well as the client may face sanctions. This means that your attorney must do more investigating and fact-checking to make sure your information as well as his certification is above-board.

Is it best to have a bankruptcy attorney when and if it comes time to file for bankruptcy? There is certainly no legal requirement stating that you have to retain a lawyer. However, you would be very foolish not to do so. If you choose to file on your own, and forget to file certain documents, your case can be subject to dismissal and you will need to start again from the very beginning. As an example, a couple recently tried to file for bankruptcy online. They were not exactly sure if we should have filed jointly or just the husband. They were doing it on their own and really goofed things up and now they are paying for it! Please do not do this in an attempt to save some money because it will only come back to haunt you in the end. It is in your best interest to have an experienced bankruptcy attorney working for you.

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The US congress passed a set of uniform laws to govern how bankruptcy is dealt with. In these bankruptcy laws, or the bankruptcy code, there are ways to protect the debtor from being harassed while they are trying to pay off their loans. The different methods that can be used are set out in certain chapters of the bankruptcy code.

These bankruptcy chapters such as chapter 11, chapter 9, and chapter 13 are recognized by the judicial courts to be bankruptcy laws that each state must work with. While the main body of these bankruptcy laws cant be changed there are various amendments that can be done. These amendments in turn become part of the bankruptcy laws.

From time to time Congress will change the various sections in the bankruptcy code to account for the trends and occurrences in todays business environment. To make sure that you understand what these new bankruptcy laws are and how they affect you it is best to consult with a lawyer.

You should make sure that you are looking at these bankruptcy laws only if you have no other recourse for getting out of financial difficulties. As bankruptcy is a very complicated process you should use this measure only as a last resort.

Since congress can change the bankruptcy laws to reflect our varied lifestyle expenditure you will find that these laws can make it difficult for you to declare bankruptcy even if you are in non-solvent position to pay off your creditors.

One of the other effects that can be found in the changes that have been made to the chapter 7 bankruptcy laws is that all debtors must have credit counseling. This counseling will help the debtor understand what they can do to avoid getting into debt again. In the counseling sessions you will be given alternative routes to take with regard paying off your debts.

This credit counseling must be gone through before you can file for bankruptcy. To have this credit counseling you can only use agents that have been approved by the government. Of course you should have received a certificate that states that you have gone through with a credit counseling session.

During the credit counseling you may be presented with a plan to pay off your creditors. Whether you agree with this plan or not you will need to present this plan to the bankruptcy courts.

According to the bankruptcy laws you will need to visit this center when your bankruptcy case has been filed. This counseling session will be for you to learn about personal finance management. You must present a certificate from this session of counseling to have your debts discharged fully.

While bankruptcy laws can help protect the person who is in debt trouble, there are instances where the bankruptcy laws can cause more financial hassles than they were intended for. Therefore bankruptcy should be a last resort only.

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by pdstahl

Know the New Bankruptcy Laws

So, what have you finally planned to do with the rising amount of debts? Perhaps you are burying your head in sand with the hope that everything would be fine someday. Think once, just sitting and doing nothing won’t help you and if you are one amongst the million Americans almost drowned in unsecured debt then just hoping against hope and robbing Peter to pay Paul won’t be of any help. In fact in this recent economic scenario people are finding it almost impossible to get out of the mounting amount of debt. It is when Massachusetts Foreclosure finds its way to a number of American families. And if you are the one naked deep in debt and think that it’s impossible to get out of the quick sand, then it is an indication that you need professional assistance. Consider filing for bankruptcy to get out of your debt with dignity. Still the question remains how to file for bankruptcy. Well before that let’s see what bankruptcy is! Bankruptcy is a legal help, typically structured to give people a fresh start, free of debt. However, before you decide to file Massachusetts bankruptcy, it’s advisable to educate yourself on the varied categories of bankruptcy and bankruptcy laws.

In fact Bankruptcy is the last resort and the law has defined some of the situation as the perfect scenarios to go ahead with Massachusetts bankruptcy filing. Let’s see when you can file for bankruptcy. If and when you start borrowing from one card to pay the other, when you try your level best to keep your debts up to date and for this, you start using your savings. Apart from the above eluded situations if you have defaulted on credit card, if your business fails, or if you had a substantial reduction in your monthly income, then you can file think about filing for bankruptcy in Massachusetts.

In fact the new bankruptcy law has typically defined 4 different types of bankruptcy like the Chapter 7, Chapter 11, Chapter 12 and the Chapter 13. Also known as the individual bankruptcy, the Chapter 7 and the Chapter 12 are typically created to help you in restructuring your financial status. While Chapter 7 helps you in getting released from your dischargeable debts, Chapter 13 however allows you to reduce your debt to a manageable level and also supports you in maintaining the payment plan. Chapter 11 bankruptcies are known as the business bankruptcy and cater to the business entities while Chapter 12 bankruptcy is typically structured for the farmers and the anglers.

Few of the bankruptcy actions allow the debtor to stay in his business and use the revenue that has been generated just to resolve his loans. In fact the chapter 7 that is called liquidation is also known by straight bankruptcy and is known as the most common kinds of bankruptcy measures. This bankruptcy law typically involves an appointment of a trustee and the trustee is the person who collects all the non-exempts assets of the debtor and sells it and then distributes the takings to the creditors. Other chapters are 11, 12 and 13 that basically involves the remedy of the debtors to permit them to use future income in order to pay off the creditors.

The bankruptcy laws are just not simply charity and are meant for the greater perspective of encouraging the entrepreneurial risk taking and for the growth of the U.S economy. With mortgage loan modifications and with an array of other methodologies bankruptcy helps in regaining your financial balance. The Massachusetts bankruptcy center with its various locations and with a team of expert bankruptcy attorneys provides tailored solutions in restructuring your financial stability.

FBN’s Sandra Smith breaks down the day’s top business stories.
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