If you're thinking of filing for bankruptcy, you probably know in the last two years, there have been major changes to the bankruptcy process. These changes are significant. For instance, while in the past, Chapter 7 Bankruptcy (wherein debts are wiped out and no repayments are required) was relatively easy to get, now most people who have income will be forced to file Chapter 13 Bankruptcy (wherein they will still have to make some payments on a percentage of their debts even after filing). Filers for bankruptcy will also have to take credit counseling now, will have to do more paperwork (of course), and it will be tougher to file more than once in the same decade. A good list of changes exists at About.com.
You may have questions about all these new bankruptcy laws. How do you find answers to these questions before you make such a big decision like filing or not filing for bankruptcy? Here are some resources and tips as you try to learn more about new bankruptcy laws.
- Check with the Feds. The new bankruptcy laws were enacted by Congress in 2005 as the Bankruptcy Abuse Prevention And Consumer Protection Act. I will refrain from commenting on what the real name of the act should have been, but the words "credit card companies" and "pummeling Americans" come to mind. Anyhow, since the U.S. government passed the new bankruptcy laws, why not let the feds answer some of your questions? They have a website that has information on the new regulations.
- Ask a credit counselor. As part of the new bankruptcy law, all people filing for bankruptcy must seek credit counseling, but you may want to talk to a credit counselor first to see if filing for the big B is even what's right for you. Credit counselors work to educate clients about budgets, savings, debt reduction, and all that jazz. Check with the Better Business Bureau, local civic groups, or people you trust to find a counselor who's worth seeing. (If someone just tries to sell you on a debt reduction plan, that's not a good credit counselor.)
- Seek legal advice. There are lawyers specializing in bankruptcy law. The good ones will certainly be able to help you negotiate your way through the new bankruptcy laws and what these laws might mean to you. A good lawyer may also be of help if you go ahead and file for bankruptcy, as there's a lot of legalese involved and court; a layperson may have trouble figuring out the details. As you would when considering a consultation with any lawyer, do your research into his credentials and track record. A shady lawyer is not likely to be of much help. After all, this is bankruptcy, not personal injury law. I'm only kidding, of course.
- Ask someone who has filed recently. If you have a friend of family member or colleague who has recently dealt with the new bankruptcy laws, sit down and ask about their experiences. Sure, they may not know all the technicalities the way a lawyer or credit counselor would, but if they're fairly observant and kept good records, they can talk to you at least about the process they went through and how the new bankruptcy laws affected them.
Filing for bankruptcy is often a last ditch measure people take when their finances are out of control. In itself, it's a stressful act with long-lasting effects on a person's financial record. With new bankruptcy laws, things are just that much more complicated and stressful, too. Don't hesitate to seek out professionals and trusted advisors to help answer your questions about new bankruptcy law. If you're about to make a big decision "to file or not to file," you want to go into it knowing the facts.