Personal -
Bankruptcy Law and How to Get
Your Credit Back
Personal Bankruptcy what is it?
Personal Bankruptcy is legal procedures that enables a debtor to for the
time being or lastingly avoid paying some of their personal debt unpaid.
The US Congress enacted the existing bankruptcy code in 1978, and newly
amended it in the spring of 2005.The objective of the legislation is to
give relief and structure to those people of society who have gotten
themselves so deep into debt they can not possibly pay back. Currently
there are 2 forms of bankruptcy that are available for individuals:
chapter 13 & chapter 7.
Will you be able to get credit again?
Undoubtedly, the banks have become better at working with people who
have filed for personal bankruptcy. You can get a new kind of protected
credit card, where a deposit is made to cover the line of credit. This
card is the start of the process of credit restoration. Within a couple
of years, the banks will start giving you credit again.
What about my creditors?
You might worry about your creditors harassing you, and if they will
ever get off your back. They will! By law all activities against a
debtor must end when bankruptcy papers have been filed with the
government.
Will anybody know that I filed?
Very few people will know that you have filed for Bankruptcy. The file
goes into the public record. Credit bureaus will keep a documentation of
your filing for 10 years.
Changes made to the bankruptcy laws?
The "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005"
was passed by congress in spring of 2005 and will be effective on
October 17th, 2005. The purpose of the act was to force people who have
enough money to make some of the payments on their debt make those
payments instead than steer clear of the debt all together. The major
changes are:
Tests are performed to identify the ability of the debtor to pay
their debts. The tests are: Is the family earning higher than the
average income for their state? If yes, does the family have enough
income to pay some or all of their debts?
Debtors wishing to filing for bankruptcy must give the government
their most recent tax return.
A minimum 2 year residency is required to take advantage of state
exceptions.
Counselling: Debtors must have completed a federally approved credit
counselling program within the six months prior to filing.
Child support and Alimony payments were moved to first priority when
dividing the income.
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