Since bankruptcy legislation changed in late 2005, the amount of filings has decreased but the number of people in need of help has not. The second fiscal quarter of 2007 saw the highest amount of filings for Chapter 7s (131,039) since the new laws had passed. President Bush wanted to prohibit serial filers and those who abused the system, but the new legislation has hampered many in the nation to get out of situations that the economy has caused indirectly. With the mortgage crisis, many home owners with adjustable rate loans and other Sub-prime geared products have found themselves in financial hardship. Some even face losing their homes. Although Congress has scrambled to pass new legislation to help those in this situation, this is affecting hundreds of thousands. Also statistics gathered from a Bankruptcy website, show that 2 out of 3 consumers who filed for bankruptcy had lost their job and that half of all bankruptcy filers had experienced major health problems.
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The new legislation requires several new things. First is a means test, this is to figure out whether you have enough disposable income, after subtracting certain allowed expenses and required debt payments, to make payments on a Chapter 13 plan. Prior to this legislation a consumer can apply for whichever chapter they thought was appropriate. Also new is a requirement that a filer must enroll in credit counseling prior to filing for bankruptcy. The purpose of this counseling is to give you an idea of whether you really need to file for bankruptcy or whether an informal repayment plan would get you back on your economic feet. Counseling is required even if it is obvious that a repayment plan is not feasible or that you are facing debts that you find unfair and don't want to pay.
The new legislation also imposes some additional requirements on lawyers, among them that the lawyer must personally vouch for the accuracy of all of the information their clients provide them. With the new requirements of the legislation legal fees have risen, also some lawyers who specialized in this field have gone to different fields of expertise making it harder to find good representation.
A new facet of bankruptcy now mandates that the IRS dictates what the allowed expense amounts are, not what an individual s true living expenses are. This change means that individuals who have higher than IRS standard living expenses will have to tighten their budget and live on less and pay more towards their debts.
With fewer options available to consumers, companies like NegotiateMyDebt.com [http://www.Negotiatemydebt.com] have grown by providing consumers a new avenue to explore to get debt relief. Debt settlement and Debt management programs have helped thousands of individuals avoid bankruptcy and regain normalcy in their life. Consumer debt has grown out of control and seems as though there will be no slow down, and debt relief companies may be an answer to help those who have little options left.
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