Upon first recognition that you need to take drastic measures against your mounting pile of bad credit, it can be overwhelming. So many different avenues to take, do you want to file chapter 13 bankruptcy or do you qualify for chapter 7? And how exactly is chapter 11 bankruptcy any different? You’ve made the tough decision to file bankruptcy, now you just don’t know where to start. Here are some tips on what to do first when facing a financial crisis.
Bankruptcy Rule 1: Stop using your credit cards. Using credit cards with intent to file for bankruptcy will give creditors the opportunity to challenge your discharge of the debt. If you’ve accumulated the debt knowing you could not repay it creditors have the option to nullify your debt discharge- usually done through a lawsuit or adversary proceeding. Lesson one, no more charging. Period.
Bankruptcy Rule 2: See to it that there are no other options for you to utilize. Between debt management, credit counseling, and all the untrustworthy organizations promising a quick fix, there is no doubt that it will require some homework. But do your research and make sure that there isn’t a more gentle method of cleaning up your credit before you resort to the big “B”.
Bankruptcy Rule 3: Once you’ve narrowed down your options and filing bankruptcy is the only one that seems like it will work for you and your situation, find a good lawyer. Many people try to go through this process on their own and end up losing big in the end. Proper legal council will guide you through the process, offer advice on which chapter of bankruptcy is best for you, and will be a huge asset if it comes down to negotiating for better terms with your creditors.
Bankruptcy Rule 4: Figure your costs. Bankruptcy filing fees vary widely from state to state and naturally different lawyers will have different fee schedules, some charging a flat fee, others charging based on how deeply you are in debt. Still other require you to pay up front before they even start the process, but once you have started working with a lawyer, refer all creditors to this office.
Bankruptcy Rule 5: Depending on whether you’re filing for chapter 7 or chapter 13 bankruptcy, prepare to give up some of your belongings. Exempt items such as tools of your trade and low value heirlooms are considered exempt items. All others fall in the non-exempt category and are likely to be sold so that payments can be made to your creditors. Payment amounts differ between chapters; in chapter 7 bankruptcy you may never have to pay a creditor and had all of your debt written off. However if filing for chapter 13 bankruptcy you will be put on a three to five year payment plan at the end of which any outstanding debt will be written off. Again a good lawyer will be able to tell you which one would help more for your specific situation.
If you file chapter 7 bankruptcy, on the 60th day after meeting with your creditors to negotiate the terms of your bankruptcy declaration, your creditors forfeit the right to challenge any and all of your discharge and you will receive a notice of discharge. This notice will come within 30 – 60 days after your final payment under a chapter 13 bankruptcy filing Best of luck in all your endeavors and may your financial recuperation be speedy.
http://www.add-articles.com/Article/Five-Rules-to-Consider-Before-Filing-Banckruptcy/3726
Friday, July 20, 2007
Debt Relief or Bankruptcy
Money is a tricky thing and sometimes can be hard to manage. As many of us watch our debt pile up and the interest keeps accruing it can become very overwhelming and devastating. These factors are magnified by the confusion that creditors create with tricky payment terms and hidden and outrageous fees. Needless to say, when you are in over your head, creditors take very little sympathy for you. They want their money, and they don’t care how they get it.
If you are one of the millions of people in this country struggling to keep your head above water it often feels like it’s you against the world. When you have severe debt, there are usually two options, enlisting the services of a debt relief organization or declaring bankruptcy. While many of us know the ground rule for declaring bankruptcy, debt relief organizations are still huge benefactors about which, little is known. Debt relief services offer a way out. They can help consolidate your credit card bills, tuition loans, and medical bills all into one monthly payment that you and the debt relief organization set together. If you are in debt this is an excellent way to reduce your debt.
By using a debt relief organization you should no longer receive those harassing phone calls from collectors. The monthly payment is a fixed rate and will never increase. You are no longer dealing with collections or a specific credit card company. The debt relief process works by consolidating all your bills, and the debt relief organization makes an agreement with your credit card company to make the payments upon your behalf. In turn you pay the debit relief organization your monthly payments. Thus taking you out of direct contact with the creditors and reduces you debt faster than you could on your own without interest continuing to pile up.
Your alternate option to using a debt relief service is to declare bankruptcy. By declaring bankruptcy you are protecting all of your inherit assets and stating that you can not pay your debt off. This relinquishes you from debt and without paying back the money you owe. However it is strongly advised not to go this route as recovery from a bankruptcy declaration will take seven years to recuperate from on your credit report. Although it looks like the easier of the two, declaring bankruptcy has severe long term consequences. The chances of you ever having good credit again are nonexistent. It will be extremely difficult for you to obtain a loan or even a credit card. Another thing to take into account is whether you will ever need to make a large purchase such as a car or home. If you declare bankruptcy you are not longer qualified to receive a loan. Though there are a handful of organizations that will loan you money, they will only do so at tremendously high interest rates and sometimes unethical business practices.
There may be other options than these listed here that would require special circumstances and considerations. However these are the general choices you have. By going with a debit relief organization you are ensuring a better future you and your family. Declaring bankruptcy has negative consequences and should be considered a last resort. Remember, working with a debt relief organization should take up to five years to get everything paid off but being debt free is a wonderful feeling regardless on how you get there.
http://www.add-articles.com/Article/Debt-Relief-or-Bankruptcy/3766
If you are one of the millions of people in this country struggling to keep your head above water it often feels like it’s you against the world. When you have severe debt, there are usually two options, enlisting the services of a debt relief organization or declaring bankruptcy. While many of us know the ground rule for declaring bankruptcy, debt relief organizations are still huge benefactors about which, little is known. Debt relief services offer a way out. They can help consolidate your credit card bills, tuition loans, and medical bills all into one monthly payment that you and the debt relief organization set together. If you are in debt this is an excellent way to reduce your debt.
By using a debt relief organization you should no longer receive those harassing phone calls from collectors. The monthly payment is a fixed rate and will never increase. You are no longer dealing with collections or a specific credit card company. The debt relief process works by consolidating all your bills, and the debt relief organization makes an agreement with your credit card company to make the payments upon your behalf. In turn you pay the debit relief organization your monthly payments. Thus taking you out of direct contact with the creditors and reduces you debt faster than you could on your own without interest continuing to pile up.
Your alternate option to using a debt relief service is to declare bankruptcy. By declaring bankruptcy you are protecting all of your inherit assets and stating that you can not pay your debt off. This relinquishes you from debt and without paying back the money you owe. However it is strongly advised not to go this route as recovery from a bankruptcy declaration will take seven years to recuperate from on your credit report. Although it looks like the easier of the two, declaring bankruptcy has severe long term consequences. The chances of you ever having good credit again are nonexistent. It will be extremely difficult for you to obtain a loan or even a credit card. Another thing to take into account is whether you will ever need to make a large purchase such as a car or home. If you declare bankruptcy you are not longer qualified to receive a loan. Though there are a handful of organizations that will loan you money, they will only do so at tremendously high interest rates and sometimes unethical business practices.
There may be other options than these listed here that would require special circumstances and considerations. However these are the general choices you have. By going with a debit relief organization you are ensuring a better future you and your family. Declaring bankruptcy has negative consequences and should be considered a last resort. Remember, working with a debt relief organization should take up to five years to get everything paid off but being debt free is a wonderful feeling regardless on how you get there.
http://www.add-articles.com/Article/Debt-Relief-or-Bankruptcy/3766
The Last Debt Solution Should Be Bankruptcy
A debt solution like bankruptcy should really only be used as a last possible solution. The problem with this solution of debt problems is that it includes a lot more than simply eliminating debt. When someone declares them self bankrupted, all debt collection actions against that person are prevented. The court grants an "automatic stay", which - with a few exceptions means that creditors cannot come after the money owed to them.
The most important exception is that when a loan is secured by property creditors can seek relief from the stay and seize that property. The other exceptions are student loan debt, alimony, child support and taxes. The backside for the person who seeks this solution to eliminate his debt is that he or she must hand over all non-exempt property. This property is then sold and the proceeds are distributed amongst the creditors.
There are two types of this solution of your debt problems:.
Chapter 7
which states that a person is required to hand over much of their property, but creditors cannot seek damages from further income.
Chapter 13
allows a person to keep most of their income, but have to make a plan to pay the debt back to creditors based on their future income. Under this plan, the court can require individuals to live within a very strict budget.
As you see, there are downsides to both debt elimination plans. One of the biggest downside is that both debt erase plans will significantly impact a person's credit rate. For this reason, declaring yourself bankrupt is a solution of your debt problems that should be evaluated very thoroughly and carefully. Other debt solutions like debt negotiation, debt counselling and debt consolidation should definitely be considered first.
http://www.add-articles.com/Article/The-Last-Debt-Solution-Should-Be-Bankruptcy/5394
The most important exception is that when a loan is secured by property creditors can seek relief from the stay and seize that property. The other exceptions are student loan debt, alimony, child support and taxes. The backside for the person who seeks this solution to eliminate his debt is that he or she must hand over all non-exempt property. This property is then sold and the proceeds are distributed amongst the creditors.
There are two types of this solution of your debt problems:.
Chapter 7
which states that a person is required to hand over much of their property, but creditors cannot seek damages from further income.
Chapter 13
allows a person to keep most of their income, but have to make a plan to pay the debt back to creditors based on their future income. Under this plan, the court can require individuals to live within a very strict budget.
As you see, there are downsides to both debt elimination plans. One of the biggest downside is that both debt erase plans will significantly impact a person's credit rate. For this reason, declaring yourself bankrupt is a solution of your debt problems that should be evaluated very thoroughly and carefully. Other debt solutions like debt negotiation, debt counselling and debt consolidation should definitely be considered first.
http://www.add-articles.com/Article/The-Last-Debt-Solution-Should-Be-Bankruptcy/5394
How To Know The Facts from the Myths In Bankruptcy
If you are contemplating the possibility or prospect of filing for bankruptcy, you likely have in mind a number of myths about the process and procedure of bankruptcy. (You may also have some basic facts about bankruptcy, but desire more before you make a final decision as to whether or not you want to proceed with such an action.) Through this article, the basic facts and some common myths about bankruptcy are discussed.
1. One of the most common myths associated with bankruptcy is that a bankruptcy permanently damages your credit history. While it is true that a bankruptcy will appear on your credit history for a period of seven to nine years, it does not remain on your credit report or part of your credit history indefinitely.
2. Another of the common myths associated with bankruptcy is that all of your debts simply “go away” or “vanish” after you have filed for relief. In point of fact, not all of your debts will be discharge through a bankruptcy action. Indeed, in recent times, lawmakers have made it more difficult for consumers to rid themselves of certain types of debt through the bankruptcy process. For example, debt that people have amassed on credit cards is no longer easy to dispose of in bankruptcy court.
3. One of the myths (or confusions) associated with bankruptcy centers on the different between secured and unsecured debt. Many people assume that all debt is the same. In point of fact, when it comes to seeking and obtaining bankruptcy relief, there is a significant different between secured and unsecured debt. An example of unsecured debt is that debt that you accrue on a typical credit card. As an example, if you charge food, gasoline and the like on your credit card, the balance on your credit card is considered unsecured debt.
As an aside, you do need to keep in mind that there are some credit card charges that end up as secured loans. In other words, if you let the credit card become delinquent, certain items that you have purchased on a credit card may be repossessed. An example, of such a card is a credit card provided by a retailer that sells appliances and electronics. In many instances, these stores do take a lien interest in the property sold to you. And, if you end up defaulting on the credit card, they can and oftentimes do repossess the property in question.
A prime example of secured debt is the mortgage on your home. The amount of money that you have been provided in the form of a loan is “secured” by your home itself. In other words, if you default on the loan, the lender has the ability to foreclose on the home and take your house as a means of satisfying what is due and owing on the loan itself. Another example of a secured loan would be the loan on your motor vehicle. As with the house, if you default on your car loan, the lender has the chance to repossess the vehicle to satisfy the outstanding balance on the loan itself.
In bankruptcy, when it comes to a secured loan, you have the ability (in most instances) to execute what is known as a reaffirmation agreement. Through a reaffirmation agreement you have the ability to continue to make payments on your mortgage or car payments and you will be able to keep the residence or the automobile.
4. Another of the common myths associated with the bankruptcy process is that it is easy. Many people think that they can trot off to the bankruptcy courthouse on their own and file a petition without a hassle. In reality, consumer bankruptcies can be very complicated. Therefore, in the vast majority of cases, a consumer is well served obtaining the assistance of a qualified lawyer to assist with the case. An experienced lawyer can and usually does make a world of difference when it comes to this type of legal relief for a consumer.
By understanding the myths and facts associated with bankruptcy, you will be able to determine if bankruptcy is the best option for you. By understanding the facts of bankruptcy, you will have taken the first step on the road to bringing order to your financial house.
http://www.add-articles.com/Article/How-To-Know-The-Facts-from-the-Myths-In-Bankruptcy/11326
1. One of the most common myths associated with bankruptcy is that a bankruptcy permanently damages your credit history. While it is true that a bankruptcy will appear on your credit history for a period of seven to nine years, it does not remain on your credit report or part of your credit history indefinitely.
2. Another of the common myths associated with bankruptcy is that all of your debts simply “go away” or “vanish” after you have filed for relief. In point of fact, not all of your debts will be discharge through a bankruptcy action. Indeed, in recent times, lawmakers have made it more difficult for consumers to rid themselves of certain types of debt through the bankruptcy process. For example, debt that people have amassed on credit cards is no longer easy to dispose of in bankruptcy court.
3. One of the myths (or confusions) associated with bankruptcy centers on the different between secured and unsecured debt. Many people assume that all debt is the same. In point of fact, when it comes to seeking and obtaining bankruptcy relief, there is a significant different between secured and unsecured debt. An example of unsecured debt is that debt that you accrue on a typical credit card. As an example, if you charge food, gasoline and the like on your credit card, the balance on your credit card is considered unsecured debt.
As an aside, you do need to keep in mind that there are some credit card charges that end up as secured loans. In other words, if you let the credit card become delinquent, certain items that you have purchased on a credit card may be repossessed. An example, of such a card is a credit card provided by a retailer that sells appliances and electronics. In many instances, these stores do take a lien interest in the property sold to you. And, if you end up defaulting on the credit card, they can and oftentimes do repossess the property in question.
A prime example of secured debt is the mortgage on your home. The amount of money that you have been provided in the form of a loan is “secured” by your home itself. In other words, if you default on the loan, the lender has the ability to foreclose on the home and take your house as a means of satisfying what is due and owing on the loan itself. Another example of a secured loan would be the loan on your motor vehicle. As with the house, if you default on your car loan, the lender has the chance to repossess the vehicle to satisfy the outstanding balance on the loan itself.
In bankruptcy, when it comes to a secured loan, you have the ability (in most instances) to execute what is known as a reaffirmation agreement. Through a reaffirmation agreement you have the ability to continue to make payments on your mortgage or car payments and you will be able to keep the residence or the automobile.
4. Another of the common myths associated with the bankruptcy process is that it is easy. Many people think that they can trot off to the bankruptcy courthouse on their own and file a petition without a hassle. In reality, consumer bankruptcies can be very complicated. Therefore, in the vast majority of cases, a consumer is well served obtaining the assistance of a qualified lawyer to assist with the case. An experienced lawyer can and usually does make a world of difference when it comes to this type of legal relief for a consumer.
By understanding the myths and facts associated with bankruptcy, you will be able to determine if bankruptcy is the best option for you. By understanding the facts of bankruptcy, you will have taken the first step on the road to bringing order to your financial house.
http://www.add-articles.com/Article/How-To-Know-The-Facts-from-the-Myths-In-Bankruptcy/11326
Will Changes In Bankruptcy Laws Affect You?
There are 2 sides to the changes in bankruptcy rules.
It will be a lot harder to file bankruptcy under chapter 7 and get a totally clean slate.
For businesses, relying on issuing credit, the new personal bankruptcy law is doing great, reducing personal bankruptcy claims from the thousands to double digits.(In the short run).
However, lawyers working with the actual people filing for bankruptcy say that the new law is seriously flawed because it puts more financial burdens on already broke clients and reduces potential debt repayment to small businesses.
And then of course you have the credit card companies charging high interest rates which in quite a few cases caused the bankruptcy in the first place.
According to some financial specialists, much of the debt people accumulate is a result of keeping up with the Joneses and not thinking ahead.
For 80% of clients counseled each month, the debt is credit card related and averages $32,000 - a result of six to eight cards.
Consumer credit organizations say the new law provides debt-reducing strategies for those considering filing bankruptcy and curbs abuse.
Under the new law it has become a requirement that the person filing bankruptcy obtains credit counseling both before and after filing for which that person will be charged..
So now the consumer would then know the advantages and disadvantages of declaring bankruptcy. Yet it seems merely another expense for an already financially stressed individual.
People filing bankruptcy in general are not overspenders, but merely faced with temporary financial disasters such as medical costs, layoffs, a divorce, gambling debts or other crises.
Before you can file bankruptcy,you are now required to complete credit counseling with an agency approved by the U.S. Trustees office.
This credit counseling is designed to help you determine whether or not bankruptcy is appropriate.
Once you complete your bankruptcy, the law requires you to attend another credit counseling session.
These are new requirements, before this law was passed the law did not require a person to go through counseling either before or after the filing of bankruptcy.
Second, under the old law, a person could decide to file under Chapter 7 or Chapter 13. Under the new law, the court will look at your monthly income and apply a means test relating to the state in which you live. If your income is less than or equal to the medium income then you will be allowed to file Chapter 7 which in effect will give you a clean slate.
This medium income can vary from $28,000 in Missouri to $56,000 in Alaska.
If your income is greater, you may be forced to file Chapter 13 unless you can demonstrate you do not have enough disposable income.
Under Chapter 13 you will not get a clean slate but will have to make payments on your debts.
Also, your attorney now has to personally certify that your bankruptcy filing is accurate. This means more work for the attorney, with higher legal fees.
Advantages of declaring Bankruptcy:
Legal protection from creditors
Takes care of all or most debt
In some cases, can keep home and car
May stop complete financial ruin
Provides a fresh start
Disadvantages of declaring Bankruptcy:
Bad credit
May have to repay partial debt load and return collateral to creditors
May lose assets, including house and car (If the house is worth more than a certain amount).
Bankruptcy becomes public record, and
Remains on credit record for seven to 10 years
“In the past, a bankruptcy offered a fresh start for the filer,” said Columbia attorney Gwen Froeschner Hart. “The new federal legislation offers language directed at helping creditors.”
If you analyze credit card expenses for most people you'll see that they often include medical bills and day-to-day expenses for the elderly or those earning low or fixed incomes.
Records show that 50% of credit card holders do not pay their full credit card bills every month.
33% of the population can't afford medical insurance so have to charge their prescription drugs.
With the recent Medicaid cuts and rigid bankruptcy legislation who knows what is going to happen to these people.
There are some who say consumers are abusing creditors.
The irony is that credit card companies are begging for customers and offering large amounts of unsecured credit, yet at the same time, lobbying for stricter debt controls.
http://www.add-articles.com/Article/Will-Changes-In-Bankruptcy-Laws-Affect-You-/11503
It will be a lot harder to file bankruptcy under chapter 7 and get a totally clean slate.
For businesses, relying on issuing credit, the new personal bankruptcy law is doing great, reducing personal bankruptcy claims from the thousands to double digits.(In the short run).
However, lawyers working with the actual people filing for bankruptcy say that the new law is seriously flawed because it puts more financial burdens on already broke clients and reduces potential debt repayment to small businesses.
And then of course you have the credit card companies charging high interest rates which in quite a few cases caused the bankruptcy in the first place.
According to some financial specialists, much of the debt people accumulate is a result of keeping up with the Joneses and not thinking ahead.
For 80% of clients counseled each month, the debt is credit card related and averages $32,000 - a result of six to eight cards.
Consumer credit organizations say the new law provides debt-reducing strategies for those considering filing bankruptcy and curbs abuse.
Under the new law it has become a requirement that the person filing bankruptcy obtains credit counseling both before and after filing for which that person will be charged..
So now the consumer would then know the advantages and disadvantages of declaring bankruptcy. Yet it seems merely another expense for an already financially stressed individual.
People filing bankruptcy in general are not overspenders, but merely faced with temporary financial disasters such as medical costs, layoffs, a divorce, gambling debts or other crises.
Before you can file bankruptcy,you are now required to complete credit counseling with an agency approved by the U.S. Trustees office.
This credit counseling is designed to help you determine whether or not bankruptcy is appropriate.
Once you complete your bankruptcy, the law requires you to attend another credit counseling session.
These are new requirements, before this law was passed the law did not require a person to go through counseling either before or after the filing of bankruptcy.
Second, under the old law, a person could decide to file under Chapter 7 or Chapter 13. Under the new law, the court will look at your monthly income and apply a means test relating to the state in which you live. If your income is less than or equal to the medium income then you will be allowed to file Chapter 7 which in effect will give you a clean slate.
This medium income can vary from $28,000 in Missouri to $56,000 in Alaska.
If your income is greater, you may be forced to file Chapter 13 unless you can demonstrate you do not have enough disposable income.
Under Chapter 13 you will not get a clean slate but will have to make payments on your debts.
Also, your attorney now has to personally certify that your bankruptcy filing is accurate. This means more work for the attorney, with higher legal fees.
Advantages of declaring Bankruptcy:
Legal protection from creditors
Takes care of all or most debt
In some cases, can keep home and car
May stop complete financial ruin
Provides a fresh start
Disadvantages of declaring Bankruptcy:
Bad credit
May have to repay partial debt load and return collateral to creditors
May lose assets, including house and car (If the house is worth more than a certain amount).
Bankruptcy becomes public record, and
Remains on credit record for seven to 10 years
“In the past, a bankruptcy offered a fresh start for the filer,” said Columbia attorney Gwen Froeschner Hart. “The new federal legislation offers language directed at helping creditors.”
If you analyze credit card expenses for most people you'll see that they often include medical bills and day-to-day expenses for the elderly or those earning low or fixed incomes.
Records show that 50% of credit card holders do not pay their full credit card bills every month.
33% of the population can't afford medical insurance so have to charge their prescription drugs.
With the recent Medicaid cuts and rigid bankruptcy legislation who knows what is going to happen to these people.
There are some who say consumers are abusing creditors.
The irony is that credit card companies are begging for customers and offering large amounts of unsecured credit, yet at the same time, lobbying for stricter debt controls.
http://www.add-articles.com/Article/Will-Changes-In-Bankruptcy-Laws-Affect-You-/11503
The Facts About Personal Bankruptcy
The thought of personal bankruptcy is very frightening, however over 5.4 per 1,000 people have filed for bankruptcy last year, and this rate has been growing at an average of nearly 7 percent. Researchers have determined that the primary cause of personal bankruptcy is uncontrollable levels of consumer debt oftentimes coupled with an unexpected event, such as a major medical expense not covered by insurance, the loss of a job, divorce or death of a spouse. According to economists’ surveys, the classic bankruptcy filer is a blue collar, high school graduate who is the head of a household in the lower middle-income class with heavy use of credit. In order to protect both debtor, and creditor, laws were enacted to provide equal, and fair measures to satisfy the objectives of all parties. The primary purpose of the laws of bankruptcy are: (1) to give an honest debtor a fresh start in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has property available for payment.
There are two types of structured plans for filing for personal bankruptcy, Chapter 7 or Chapter 13. Over two-thirds of personal filers choose Chapter 7 bankruptcy. Basically Chapter 7 requires the debtor to liquidate all non-exempt assets, and have them distributed among creditors. Some examples of exempt assets include equity in a primary residence, and a retirement program. On the other hand, Chapter 13 does not require liquidation, rather a debtor agrees to a specific payment plan, whereby a portion of any unsecured debts is paid, and the balance is forgiven. It must be stressed, that under both plans, certain debts are ineligible for bankruptcy protection. These debts include government student loans, child support, alimony, and income tax debt. These must be paid back in full.
Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households. In an attempt to reverse the increasing trend in personal bankruptcy, the federal government has recently implemented sweeping bankruptcy reform legislation. On March 10, 2005, the Senate passed S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. On April 20th, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Bankruptcy Act of 2005). This act makes filing for bankruptcy more difficult through income-means testing, tougher guidelines for the homestead exemption, increased lawyer liability and required credit counseling.
http://www.add-articles.com/Article/The-Facts-About-Personal-Bankruptcy/10707
There are two types of structured plans for filing for personal bankruptcy, Chapter 7 or Chapter 13. Over two-thirds of personal filers choose Chapter 7 bankruptcy. Basically Chapter 7 requires the debtor to liquidate all non-exempt assets, and have them distributed among creditors. Some examples of exempt assets include equity in a primary residence, and a retirement program. On the other hand, Chapter 13 does not require liquidation, rather a debtor agrees to a specific payment plan, whereby a portion of any unsecured debts is paid, and the balance is forgiven. It must be stressed, that under both plans, certain debts are ineligible for bankruptcy protection. These debts include government student loans, child support, alimony, and income tax debt. These must be paid back in full.
Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households. In an attempt to reverse the increasing trend in personal bankruptcy, the federal government has recently implemented sweeping bankruptcy reform legislation. On March 10, 2005, the Senate passed S. 256, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. On April 20th, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Bankruptcy Act of 2005). This act makes filing for bankruptcy more difficult through income-means testing, tougher guidelines for the homestead exemption, increased lawyer liability and required credit counseling.
http://www.add-articles.com/Article/The-Facts-About-Personal-Bankruptcy/10707
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