Monday, May 7, 2012

A Guide to New Bankruptcy Laws: How to Qualify for Bankruptcy

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Things are beyond tight in your life, whether you’ve lost your job or found that the costs of living far outweigh your current paycheck. If you find yourself struggling financially, you may consider filing for bankruptcy, which may be your best option to climb out of debt.
What are the new bankruptcy laws, how do you qualify?

The New Bankruptcy Law

As of 2005, the New Bankruptcy Law has been in effect. This has made qualifying for bankruptcy under the new laws a bit more tricky; albeit not impossible as a way of starting over and getting the stress off of your back. The new law was designed to decrease abuse within the system. It protects people who have had a job loss, have huge medical bills they can’t pay, or have had some other catastrophic events that keep them from paying their bills. Bankruptcy helps families keep their home and most of their valuable assets. It also gives people and families an opportunity to pay back their creditors.

Basic Guidelines

Consult a Bankruptcy Attorney

It is imperative that you contact a well-experienced bankruptcy attorney. A bankruptcy attorney will help you to decide if you're eligible for bankruptcy and what sort of bankruptcy you qualify for. He will know what’s the best option for you depending on given circumstances: Chapter 7 is designed to help you to eliminate unsecured debts, while Chapter 13 allows you to efficiently manage your debts and protect your assets.

Evaluate Your Current Financial Situation

Your financial situation hasn't changed, and it's been a few years.

Under the new law, a means test will be given to determine if you must take out bankruptcy or if you can, in reality, handle the payments without bankrupting the debt. This is a two-part test that will offer, through formula, the amount of money you can afford to pay for unsecured debts like credit card bills. Your income will also be compared to your state's median income.

Realize Your Lack of Control Over Money

If you find that the reason you are applying for bankruptcy is from "lack of control" of your money and not specific "out of your control" issues that are causing you problems, under the new law, you will have to have some counseling to file for bankruptcy.

Sure, some people say that the new bankruptcy law is more stringent, and perhaps in some cases it is. But the new law does something else: It allows for the person to make some changes in his life to avoid what may become a serious financial setback.

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