Avoiding Bankruptcy And Bankruptcy Laws

Life after bankruptcy can be difficult. If bankruptcy can be avoided it of course is highly recommended. A few suggestions on how to avoid bankruptcy follows as well as information on new bankruptcy laws.

• Find a competent debt managing company. Enrolling in a debt management solution that has a good record of accomplishment can go a long way in avoiding bankruptcy. Debt negotiations or debt settlement should only be used to settle medical, utility, or other non-banking type bills. Debt termination or debt cancellation has recently proven the #1 way t wipe out unsecured bank loans or credit card debt.
• Get a debt consolidation loan. This is the #1 choice of Americans to bankruptcy if they still have novel or existing loans or are about to get behind in bills.
• Ask a friend or family member for a loan. Borrowing at zero interest can be a great way to avoid bankruptcy if it is possible.

Bankruptcy laws and how they affect you.

• The most important change in the past few years is no more easy chapter 7. Chapter 7 essentially made it easy t has all your debts cleared. Now you have to take a means test. This test has two parts. The first will use a formula to exempt expenses. This means that your basic living expenses like food and rent are compared to determine if you will be able to return at least 25% of your debt. The unpleasant news here is that an IRS formula is used here and if the IRS calculates that your expenses for something should be lower, you are stuck with it. The second test is if your income is larger then median income of the area you live in, if it is you will have to file Chapter 13, and this means you will have to pay back some of your debt in the next five years.
• You now have to hire a lawyer. Chapter 13 is very complicated to file.
• Credit counseling is now a must, you are required to go through credit counseling for six months following your bankruptcy.
• Some bills will have to be paid such as college loans, which must be paid back completely.
• Very little room has been left for debt problems caused by job sickness, losing a job or any other unforeseeable problems.

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