May 14, 2010

Understanding Bankruptcy Law

Posted in Bankruptcy tagged at 9:45 am by demetriagraves

Bankruptcy is a legally declared state of financial insolvency, or the inability of a debtor to pay his bills. The primary purpose of bankruptcy is to help an individual or company get out from under debt and get a fresh start. Bankruptcy litigation refers to the legal process involved in obtaining debt relief through bankruptcy court.
In the United States, bankruptcy litigation can be initiated on the behalf of both individuals and businesses. Article 1 Section 8 of the Constitution directed Congress to create laws governing bankruptcy; as a result, all such cases are handled in federal courts, and not at the state level. Bankruptcy can be either voluntary, which is filed by the debtor, or involuntary, which is forced through a filing by the creditor.
Until just a few years ago, filing for bankruptcy was fairly easy. Not anymore. When Congress changed the nation’s bankruptcy laws in 2005, many debtors found the new “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,” to be more hindrance than help in overcoming past mistakes and starting anew.
The new law is stricter, featuring more requirements than ever before. It is important for anyone considering filing bankruptcy to understand the following:
It doesn’t matter whether you file for Chapter 7 bankruptcy that discharges your debt or Chapter 13 bankruptcy which enters you into a repayment plan with creditors, anyone filing bankruptcy is required by law to attend credit counseling by a court-approved counseling service.

Under the new law, it is no longer your right to be allowed to file Chapter 7 bankruptcy. If, after proving your income the court determines that you make more than the medium income within your state, you may be required to file Chapter 13 bankruptcy instead and enter into a repayment schedule to pay back all (or most) of your creditors.

In the past, those filing bankruptcy could virtually erase their debt and start new in seven years, while continuing to live the lifestyle they’d grown accustomed to. That’s no longer always the case.
Under new federal bankruptcy laws, the IRS determines your monthly budget, and what you should be able to repay. Most are forbidden from having cell phone expenses as well as cable TV, high-speed Internet access, movies, meals out with the family, and anything else beyond the minimum allowable expenses as determined by the IRS and the courts.
For some individuals, bankruptcy litigation offers an opportunity to get out from under staggering debt and to start over. Though, this action should only be pursued after all other alternatives have been discussed. Such as, financial counseling, credit restructuring and debt consolidation.
Bankruptcy isn’t what it used to be, thanks to millions of Americans who abused the system in the past. Once reserved for people in dire financial situations to help them free themselves from excess debt and start fresh. While filing for bankruptcy may have once seemed like a good way out of a bad situation, many consumers are now opting to try and fix their financial woes themselves in lieu of letting the government fix it for them.
The final decision to file for bankruptcy can be a tough one to make. Nobody wants to be burdened with all of the problems associated with the preparation and filing process and this is where an experienced bankruptcy attorney can help you out. If you’ve felt the burn of the bad economy, or if you’ve gotten yourself into debt in an entirely unrelated manner – don’t delay the potentially unavoidable, contact an experienced bankruptcy attorney today.
If you have gotten to the point where you’ve had to start paying any of your bills late, you’ve already unknowingly gotten the ball rolling down the wrong track. Late payments lead to late fees, increased interest and quick accumulation of a greater debt. If you have trouble making ends meet now, imagine the trouble you’ll face a few months down the road when your late payments have lead to a substantially larger amount of money owed.
This can turn into a never ending cycle if you don’t act quickly to do something about it. Bankruptcy is not necessarily always the best solution to the particular problem that you have, but you might never know that without setting up a consultation with a qualified bankruptcy attorney. The longer you wait, the worse things could become for your finances, don’t do further harm to your finances by waiting around for things to magically get better, contact an experienced bankruptcy attorney today. I offer a free initial confidential consultation where you can discuss your options and get all your questions answered.
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