Tougher Bankruptcy Laws Take Effect October 2005
In just a few short weeks, President Bush?s Bankruptcy Abuse Prevention and Consumer Protection Act will take effect. In a nutshell, the new law, which goes into effect on October 17, 2005, makes it more difficult to cancel your debts under Chapter 7 Bankruptcy protection. Instead, consumers will find themselves having to file for Chapter 13 Bankruptcy protection and paying back their creditors over a five year period. Here?s a look into some of the major changes that will affect consumers choosing to file for bankruptcy after the new law goes into effect - Qualifying - Chapter 7 or Chapter 13? To be able to qualify for protection under Chapter 7 bankruptcy, consumers will have to face a means test. The means test determines if your household falls above or below the median income in the state where you reside. Those whose total is greater than the state median income will not qualify to cancel debts under Chapter 7 protection and will alternately have to file under Chapter 13 and pay back your creditors. The major intent of bankruptcy reform is to require people, who can afford to make some payments towards their debt, to make these payments, while still affording them the right to have the rest of their debt erased. The amount you have to pay back under Chapter 13 protection will be greater because instead of a 3-year pay back period, that time frame is now extended to five years - to ensure your creditors get paid. Credit Counseling Anyone filing for bankruptcy under the new law will be required to go through mandatory credit counseling. Be careful before choosing a credit counselor as this field is filled with people looking to line their pockets while emptying yours. To find a trustworthy counselor, check to see if there are any complaints against them or their organization filed with your local Better Business Bureau. Secondly, find out if they are certified by the National Foundation of Credit Counselors or the Association of Independent Consumer Credit Counseling Agencies. Finally, find out if they have not-for-profit status. Personally I recommend Consumer Credit Counseling Services as they meet all three of the above criteria. They can be reached at 1-800-888-2227 and can connect you with a local office. The Cost Factor Filing for Chapter 7 protection under the old laws normally cost under $1,000. You should expect to pay more under the new laws as filing fees have been increased by $60. Additionally, your attorney will be required to double check all your financial information which will take more of his or her time. Also there is greater liability imposed on the lawyer which may cause their liability insurance to increase, which gets passed on to their clients in the form of higher fees. Under the new law, many are expecting fees to increase between 25-50%. Why Were the Laws Changed? The bottom line is that major commercial creditors lobbied hard for reform. Companies like CitiBank, MBNA, and other credit card issuers actively contributed proposed amendments along with generous financial support to reforming the bankruptcy laws - and in their favor, according to many consumer protection groups. ? 2005, http://www.yourfreecreditreportnow.com James is editor of "TO YOUR CREDIT", a free weekly newsletter with tips to help you manage your personal finances. Subscribe today and receive his ebook ?IDENTITY THEFT- How To Avoid Becoming the Next Victim!? and other free bonuses by visiting <a href="http://www.yourfreecreditreportnow.com" target="_blank">http://www.yourfreecreditreportnow.com</a>.
Source: www.ArticlePros.com

Bankruptcy Alternatives Explained
There are many steps you can take in efforts to improve your credit, eliminate your debt, and avoid bankruptcy. Which should be the ultimate goal of all people, while bankruptcy is an excellent method of helping you clear up your debt, it should only be used as a last resort. Bankruptcy remains on your credit for up to ten years and it could result in the inability to retain any other type of credit until it has been removed or several years has passed. On thing that a debtor can do, this is especially true if they have no income or assets, is to do nothing. Yes that is right nothing, if you have no assets or income that can be garnished bankruptcy would not benefit you in any way, your financial situation would not change as a result. It is likely that without anything of high value, credits would not attempt to take any court action against you because there would be nothing they could collect. Another step you could take is to undergo credit counseling, you would learn how to manage your money to reduce the debt. You could create a budget that contains your monthly income and expenses, thus reducing expenses. By doing this, any extra money you have could go towards reducing the debt you owe to creditors. You could also begin negotiation with your creditors, most of them realize that bankruptcy is a viable option for those who have more debt than they can handle. For this reason, most will be willing to ?take what they can get? rather than get nothing if the debtor files bankruptcy. This option requires that the debtor has income or assets that can be used in efforts to raise money to apply towards the debt you owe. Additionally, this can allow you to rebuild your credit instead of applying a negative bankruptcy on it. Debt consolidation is another bankruptcy alternative that many could consider, by consolidating your debts into one low monthly payment you could easily reduce the amount of your debt, get the creditors off your back and avoid bankruptcy. Finally, another option of avoiding bankruptcy is to make a formal proposal directly to your creditors. This proposal or also knows as a deal, will allow you to create a payment plan. It is all dependent upon what area of the world you live in and the laws surrounding the area of debt compromise. Tim Renolds is the owner of <a href="http://www.loan-source.co.uk">Debt Consolidation Loan</a> providing Uk homeowners with a free loan quote service. Visit us today for a free no obligation quote.
Source: www.ArticlePros.com