New Bankruptcy Law Limits Your Options

In the past, people had many options under the bankruptcy laws to protect them if they got over their heads into debt. The new bankruptcy law changed all that.  Even the relatively simple prospect of buying a car after filing bankruptcy has changed.

As a matter of fact, under the rules of the new bankruptcy law, the more equity you have in your home, the greater the chance is that you will have to use that equity to pay off your creditors. This does nothing but increase the odds that you'll forfeit it through foreclosure. The new changes in the law make filing for bankruptcy more expensive, making it more difficult for the people that really need it to take advantage of it. In addition, the new law, instead of wiping out some debts that would have been dissolved under the old bankruptcy bill, will force the person into a repayment plan. And all of this information will go on your bankruptcy credit report.

Other fees also make filing for bankruptcy more expensive. You will be required to attend financial counseling both before and after filing for bankruptcy, which you will have to pay for. The bankruptcy laws are also more complex, which means that your lawyer fees will be higher.

The previous bankruptcy laws were based on a belief that a person who was responsible, who had worked his or her entire life, regularly paid his bills on time, and generally was a good citizen, could have an opportunity to wipe his financial slate clean and start over in the off chance that through circumstances beyond his control, he became unable to pay off his bills. To be sure, the system was abused by some, but in a society of laws, that kind of thing can't be avoided.

Now some of the old laws were woefully out of date and were long past due for modification. So changes are good. But making modifications to the law shouldn't mean that you remove the safety net for people. This is particularly true when the debt position that a lot of of these people found themselves in were surely worsened by the outrageous late fees, percentage hikes, and other "profit centers" built into the lending practices of most of the major credit card companies.

For more information and articles about chapter 13 bankruptcy law, please go to David Hoyer's site.