Filing For Bankruptcy
The first and foremost thing that any individual should accomplish when it comes to credit is to take the time to actually learn about bankruptcy process.
Bankruptcy is a form of legal procedure that enables a person, who files for bankruptcy in the court of law, to be exempted from paying a partial amount or the entire amount that he/she owes. The existing bankruptcy code of the United States of America was established in the year 1978 and was recently amended in 2005. This legislative was enacted in order to provide some relief and respite to all those people who got themselves in to the quick sand of debt without any hope of paying all their debt back. There are two forms of bankruptcy available for individuals. These are Chapter 13 and Chapter 7. Depending on each individual's situation, there is a certain chapter 7 bankruptcy eligibility that they need to know.
How to determine whether or not you will be able to get credit once again?
Over the years, the banks have evolved and have become better than before in working with people that have filed for bankruptcy. Banks are now eager to issue protected credit cards for those who have been in that situation. These protected credit cards have an initial deposit in order to cover the bank for the credit for the emergency situation. The protected credit card is the first step towards credit restorations of bankrupt customers. After a few years, the banks will again start to issue credit facilities to such customers.
Will my creditors still harass me?
Although by law, all creditor harassment of the debtors should come to an end the moment the debtor files for bankruptcy.
How will anybody become aware that I have filed for bankruptcy?
Not all people will know about your filing for bankruptcy. However, all credit bureaus retain your financial history of records and documents for a minimum of 10 years from the date of your filing for bankruptcy and this file goes into public record.
What are the recent changes made to the bankruptcy laws?
In 2005, the US congress passed the “Bankruptcy Abuse Prevention and Consumer Protection Act” of 2005. Through this law, people who had enough money to clear certain portions of the pending payments were forced to clear those payments that they could. Some of the major changes that this act underwent recently are the following:
- Tests being conducted to determine the ability of a debtor to repay his or her existing debts
- All debtors should compulsorily undergo a credit counseling program at least six months before filing for bankruptcy.
- Payments towards alimony and child support were given highest priority when dividing the income of the debtors.
Some of the tests that are being conducted to determine the ability to repay include comparing the average household income to that of the state’s AHI. If the answer to this is yes, then does the family have the ability to clear some part of the pending payments?
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