Bankruptcy laws have changed. Contrary to what many people think, not everyone who is broke is actually eligible to file for bankruptcy ó it is just not that simple.
Before, practically anyone who were unable to pay their debts would file for bankruptcy and end up losing their homes, cars and other possessions just so they can make good on at least a portion of their debt.
In 2005, the bankruptcy laws were modified and they now prohibit certain people from filing. In addition, those who do qualify for bankruptcy no longer had to be stripped bare of their possessions just so they can repay their loans.
These recent changes in the bankruptcy laws are very helpful for a lot people who are trying to recover from being in a dire financial situation. Obviously, it would be much harder to get back on your feet if the bank gets all the resources that you have left.
Benefits emanating from the bankruptcy laws
Filing for bankruptcy may not be the best experience in the world, but it certainly comes with its share of benefits. For one thing, you will no longer be obligated to pay all those bills and debts that you have accumulated over the years.
You do not have to worry about being sued for your debts anymore and your home will not be the subject of foreclosure process. In addition, you will no longer have to hide from credit card collectors because they will actually stop trying to contact you.
With all these perks, you might be wondering why people fear bankruptcy so much. It may sound like a real lifesaver but bankruptcy does put a permanent mark on your credit records and can severely affect your credit standing.
Also, there are a lot of requirements that you have to fulfill once you file for bankruptcy, such as going through the process of credit counseling. This can help you a lot because your credit counselor will not only give you advice but will also assist you in making a practical financial plan that will get you out of debt as soon as possible.
New bankruptcy law guidelines
If you take a close look at the new bankruptcy laws, you will see that there is a guideline on how to list down all your properties as well as a system for determining their value.
You will also learn about the Means Test, which determines your eligibility for bankruptcy based on the amount of your total debt and your current income. The Means Test also tells you which type of bankruptcy you are qualified for.
Bankruptcy laws and your properties
According to the bankruptcy laws, there are certain kinds of property that need not be declared when filing for bankruptcy. These properties may not be relinquished by the bank as payment for your outstanding debt.
Some areas of the bankruptcy law may seem quite ambiguous and may be interpreted in different ways. In order to avoid confusion, the best recourse is to hire a bankruptcy attorney who can help you through the entire process.
The new laws are more stringent than the earlier version but some people are still able to find loopholes and use them to file for bankruptcy even when they are not really qualified.
This can result in serious legal consequences so you should consult with your lawyer to ascertain that you are doing the right thing and do not break the bankruptcy laws.