New Bankruptcy Laws endorsing debt settlement industry
The New Bankruptcy Laws which came into effect from 17th October, 2005, have indeed opened up new possibilities for the debt settlement industry. On one hand, higher cost and more rigid nature of the new laws have put a check on extensive bankruptcy filings. On the other, it has led to a growing interest in debt settlement.
If you file for bankruptcy under Chapter7 of the New Bankruptcy Laws, most of your debts are likely to get redeemed, followed by the liquidation of your assets. While this chapter makes room for complete debt cancellation, Chapter 13 of the new laws gives the debtor a certain time limit within which he/she is supposed to pay off the due. The time span in the latter case may extend up to 5 years.
If your income exceeds the median of the State you belong to, you are considered ineligible for bankruptcy filing under Chapter 7. Instead you are to file it under Chapter 13. This clause makes way for debt repayment plans, of which debt settlement is an efficient mode of repayment. Thus, in a way, bankruptcy is leading to debt settlement!
Even the IRS interference in the debtor’s disposable income is drawing less people towards bankruptcy. Disposable income refers to the money the debtor is left with after paying for all basic expenses. As per the old rules, the court held the supreme authority to calculate the disposable income. However, the New Bankruptcy Laws state that the debtors with income more than the State median will have their disposable amounts fixed by the IRS. The result is reduction in expense amount settled by the IRS.
Bankruptcy is regarded as the last option one resorts to when all possible ways of debt repayments seem insufficient. The New Bankruptcy Laws hinges on this very idea.
In a way, it encourages debtors to explore more of the debt relief services, instead of filing for bankruptcy. It not only prevents the debtors from scoring a poor credit report lasting for 10 years, but also stops them from getting into the complexities of bankruptcy. Moreover, a bankrupt account can also spoil your relationship with the bank, thereby reducing your possibilities of easy getting loans in future. Besides, by efficient debt settlement or debt consolidation program you can even get your debt eliminated up to about 60 percent.
Therefore, think as many times as possible and look sensibly into all the alternatives before you jump into filing bankruptcy. And once you are headstrong about filing bankruptcy, do seek the advice of an experienced bankruptcy lawyer.
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