It is becoming difficult for some individuals to file for bankruptcy due to the new bankruptcy laws. These laws will make it more difficult for consumers to prove that they qualify for the Chapter 7 bankruptcy which is regarded as fast and easy.
In a chapter 7 bankruptcy, your assets are sold off and the proceeds distributed among the creditors. Your debts are canceled and you get a fresh start. Because majority of the people filing for this particular bankruptcy are without assets, credit card companies and other creditors sometimes get no repayments. In the Chapter 13 option, you create a repayment plan for a maximum of five years. Should there be debts that are not included in the plan, then you are not required to repay them. If you have a higher income, you may not be permitted to file under chapter 7. You will instead be required to repay some of the debts under Chapter 13.
The new law will permit fewer people to file under Chapter 7 therefore being forced to file under Chapter 13. This is in a bid to prevent consumers from abusing bankruptcy laws. They will now be clearing debts that are pocket friendly.
Another requirement of the new bankruptcy laws is that debtors will now have to go for debt counseling before filing for bankruptcy. There is also a requirement for additional counseling on how to manage debt and budgeting before your debts can be eliminated. With these new changes to the bankruptcy laws, the option for anyone to choose what they think is best suited for them has been left in the hands of the law.
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