Credit Counselling – The 2005 Bankruptcy Abuse And Consumer Protection Act
Very few people have been left untouched by the financial upheavals of recent years. In the good times we tend to spend and not think about it too much. The social pressures to look as though you are “succeeding” are such that when the crunch comes, we find what were manageable debts have now become unmanageable.
Chapter Seven bankruptcies are the most common choice for many people. By filing under this chapter, you are given a clean start; all of the debt that you claim is wiped out. The debts that can be claimed must unsecured and certain assets, if you have any, can be liquidated to repay your debt, with the remaining balance erased. You cannot claim debts like student loans, judgments from an injury case, delinquent child support, or alimony payments. Individuals or businesses can file a Chapter Seven.
Bankruptcy no longer carries the social stigma it once did. It is often considered the mark of someone who had the guts to try and go it alone, but failed, through little of their own, (after all, it’s the banks we now all love to blame!)
However, this doesn’t make the actual process any less stressful, and in 2005 the government brought in the Bankruptcy Abuse Prevention and Consumer Protection Act, which made it even more stressful to claim bankruptcy.
One of the main purposes of the Act was to make sure individuals weren’t using the bankruptcy laws simply to avoid debt. By hiding their true earnings and assets, it had been possible for people to claim chapter 7 bankruptcy, where all assets are liquidated but the debtor emerges free of debt, to rid themselves of unwanted debt, and at the same time retain a comfortable standard of living afterward, and with a head start in improving their credit rating after discharge. Now, anyone wanting to file for bankruptcy has to attend government approved credit counselling.
Bankruptcy can really have terrible effects to every homeowner. Regardless of the kind of bankruptcy filed it still has alarming results on your credit score. It is a given fact that the credit standing plays a vital role in every credit transaction.
If you can’t qualify for any chapter, you have other options. You can try a debt consolidation that gives you one payment you can afford. You can also contact your creditors to negotiate better payment terms. Both of these options can help you repay your debt in a manner that you can afford.
The advantage with these companies is that your credit record is nowhere near as badly affected as it is should you become a bankrupt. However, care must be taken when using one of these companies as many have turned out to be scams, taking the debtor’s cash, but not dealing with the debt itself, leaving the debtor worse off.
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