Most people have heard about the new bankruptcy laws. These new laws really changed a lot of things about filing bankruptcy. Making bankruptcy something that is more strict and less available.
The whole idea of the new bankruptcy laws was to limit bankruptcy filings and help to protect both the creditor and debtor. Filing bankruptcy is not an easy solution nor is it something that a person should do just because they do not want to repay debts. With that in mind the new bankruptcy laws changed the face of bankruptcy for everyone.
The new laws help to ensure people can not rush into filing bankruptcy. Now filing bankruptcy also includes getting educated which is aimed at helping to prevent filing again in the future. Additionally, some income groups are not able to file Chapter 7 bankruptcy anymore.
Thing to Consider About Filing
Filing bankruptcy is not an ending to financial problems. When you file bankruptcy due to severe financial problems then you will still have those problems even after you file. All bankruptcy can do is help you get debts under control. It will not solve your financial problems.
The new bankruptcy laws work hard to make sure that people understand this concept. By requiring counseling, when you file bankruptcy you will get help to learn how to get back on track financially and stay away form problems in the future.
Bankruptcy is hard on you and creditors. Your credit will suffer due to filing. Creditors lose money over bankruptcy. That is why new laws limit who can file Chapter 7 bankruptcies which wipe away debt and instead enforce filing of Chapter 11 where debts are repaid.
Income Limits
The new bankruptcy laws require a means test which will determine the income of the filer. If the income level is deemed high enough a person will have to file Chapter 11 and repay debts. Lower income filers will still be able to file Chapter 7.
The means test weighs a variety of factors to determine if a person can afford to repay debts under a court sanctioned repayment process.
Counseling Requirements
The counseling requirements of the new bankruptcy laws are in place to help ensure that everyone filing bankruptcy understands the process and understands the importance of getting their personal finances under control.
The counseling sessions are required before filing and then again before the bankruptcy is finalized. These classes are mandatory no matter what type of bankruptcy is being filed.
The new bankruptcy laws were put in place to stop abuse of the system and process. Creditors benefit greatly from the lower number of Chapter 7 filings under these laws. Many people who go to file must file a Chapter 11 bankruptcy now under the new laws.
Bankruptcy should always be a final option and used only after other attempts to settle debts have been tried. It is something that will go on your credit record for a while and can prevent you from obtaining credit in the future. Additionally, you can lose assets through the process that are seized to pay off debts. Overall, though, if you are in serious debt bankruptcy may be the key to getting your finances back under control.
By: Joseph Then
New Bankruptcy Laws – New Challenges
Understanding the Human Side of a Debt Collector May Help You Deal With One (part One)
Copyright (c) 2008 Stephen Lau
In the present financial climate, debt collection is commonplace and many people may have to deal with debt collectors due to delinquencies. To deal with creditors is an art.
If you are among one of them, you may think that debt collectors are inhuman: they may have harassed you relentlessly.
Nowadays, many individuals have become debt collectors simply because they need a job, because they want to help others, or, for some, because they have a strong need for control and power. Whatever, debt collectors get trained, but do not go to school to become debt collectors.
Remember, debt collectors are just human, like everyone else. They, too, may have problems paying their own bills.
Understanding the human side of a debt collector may help you deal with one successfully. You must understand that their work environment is always filled with negativity. They need to call you incessantly and relentlessly: they would like to see as many as possible their clients become current. Like most other types of work, they have their own daily, weekly, and monthly goals to meet too.
As a smart consumer, learn how to deal with a debt collector. Dealing with debt collection is less of a hassle if you have the know-how.
According to Sun Tsu’s famous book “Art of War”, “Know the enemy and know yourself; in a hundred battles you will never be in peril. When you are ignorant of the enemy, but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and yourself, you are certain in every battle to be in peril.”
So know your debt collector (your imaginary “enemy”) and know yourself, and you will resolve your financial problems successfully.
As a smart consumer, it is important to make your account current. It is to your own advantage if you do. Ignoring your debt or delinquency problem – what most consumers choose to do – will not make the problem go away. Make your account current through a plan (knowing yourself, such as how much payment you can afford, and what to do with your current emergency debt situation) and good communication with your debt collector (knowing your “enemy”, such as making the debt collector help you resolve your financial problems).
Knowing yourself also implies adopting a positive and confident attitude before and when you make your initial contact with your debt collector. Remember, you are not a bad person just because you cannot pay your bills. When you put down your name on the dotted line to obtain a credit or loan, you probably did it with good intention. When you are having a financial problem, take care of yourself first and foremost. Do things that may lift up your spirit – things that do not require further straining your finances, such as going camping or fishing (but certainly not going on an expensive vacation).
Be open-minded; avoid being neither defensive nor aggressive when you contact your debt collector. Remember, he or she is human, just like you. An attitude is never a good communication skill, and will not get you anywhere.
Rest assured, your debt collector knows your name and address, your home and work phone numbers, the amount of loan, whether it is secured or unsecured, your payment history, your late payments, and your last payment date and amount. Your debt collector has everything in front of his or her computer when speaking to you. Therefore, you must have the same level of information, otherwise you might feel being intimidated while speaking to a debt collector. That is to say, you must also be as prepared as your debt collector to stay in the same level of information.
As a smart consumer, always request a copy of the payment history and a copy of your contract for the delinquent account (if you have not already done so), and have them mailed to you. This may not only buy you more time, but also show your intention to resolve the problem. To protect yourself, you must read your contract in its entirety and review your account payment history. If errors occur, use them to your advantage.
Review your state’s laws regarding collections and the federal Fair Debt Collection Practices Act (FDCPA) to know your rights as a consumer. Know what a debt collector can and cannot do. If you do not wish your debt collector to call you at work, fax a request to that effect. A debt collector cannot disclose your debt information on a telephone answering machine without your prior permission, or by mailing you a postcard.
If you are knowledgeable of the law and your rights, your debt collector will know that he or she cannot intimidate you.
(Part Two will be on the communication with a debt collector.)
By: Stephen Lau