Should I file bankruptcy? is a question that many people ask themselves right now. Maybe you are facing a foreclosure process and have additional debts on top of this. If you are not well informed, you may think that you can declare bankruptcy and all your debts will be almost magically written off.
This is true to a certain extent, or was true, should we say, until the new bankruptcy laws. In any case, filing for bankruptcy should always be the very last resort for someone burdened with a lot of debt, because today a fresh start is not so simple any more.
New bankruptcy laws
If you have been asking yourself: Should I file bankruptcy?, read on, because there is new information you need to be aware of.
Since the rather burdensome new bankruptcy law known as Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, it is much harder for consumers to eliminate debt.
According to the new bankruptcy laws, debtors must agree to a debt payment schedule that can last up to five years. Furthermore, during these five years, debtors are only allowed to keep for themselves a minimum amount from their income.
Most of the times, that money barely covers the most vital living expenses, but under the new bankruptcy laws they have no choice but to allocate most of their wages to a set debt repayment program.
When to file bankruptcy?
After filing bankruptcy, you will have to live with it on your credit report for up to ten years. If a bank or other mortgage society, an employer, or even a car loan company asks you if you ever filed for bankruptcy, you will have to tell them the truth.
As you may realize, a bankruptcy record stays there for a long time. Thus, questions such as: Should I file bankruptcy? Or, Is a do it yourself bankruptcy the best for me?, are not to be answered lightly.
Should I file bankruptcy anyway?
The trouble is that even if you declare bankruptcy, you have no guarantee that all your debts will be removed. You will have to pay income tax nonetheless; you cannot stop paying child support; your student loan debt is never discharged, as is the case with some other type of debts.
We do not mean to imply that the answer to your burning question: Should I file bankruptcy?, always has to be negative, as sometimes it is the only option left.
However, before taking any major decisions, it is imperative that you meet a bankruptcy lawyer for advice. Be honest and realistic about your actual personal finances and income expectations for the near future.