Our Top Five Consumer Bankruptcy Tips
Bankruptcy relief is still available.
You may have heard about a new law passed by Congress that went into effect in October 2005. While it is true that the new law makes the process more complicated, the basic right to file bankruptcy and most of the benefits derived from it remain unchanged for most consumers. The cost of filing for bankruptcy also has increased, both in terms of fees you to have to pay the court and the fee you will have to pay your attorney.
Consult with a knowledgeable bankruptcy lawyer before filing for bankruptcy.
The decision to file for bankruptcy requires careful analysis and consideration of a number of factors. You should file for bankruptcy only after determining that it is the best way to deal with your financial problems. Because of a number of potential pitfalls in the new law, or what one consumer advocate called "gotchas", it is absolutely essential that consumers consult with a knowledgeable bankruptcy attorney before starting the process. For example, if your case is dismissed for not filing a required document, you may not be able to get the full benefit of a bankruptcy unless you wait a year to file again.
Do not procrastinate if you are facing legal action.
One provision of the new law requires that consumers receive credit counseling from an approved agency before filing for bankruptcy. If you are facing a mortgage foreclosure, car repossession, wage attachment or other imminent loss of property, you should contact a knowledgeable bankruptcy attorney immediately. He or she can help you obtain approved credit counseling so that you do so in sufficient time for the bankruptcy to be filed to stop the foreclosure sale or repossession. In order to complete the bankruptcy process, consumers also need to complete a debt education course. Again, this must be done through an approved provider and a bankruptcy attorney can point you in the right direction.
Avoiding "Credit Repair" and "Credit Counseling" Scams.
With over a million Americans filing for bankruptcy each year and with household debt at record highs, consumers are reaching out to "credit counselors" and "credit repair" companies with increasing frequency. Although there has been a recent surge in the number of these organizations readily available to offer help to consumers, there has also been a rampant increase in the number of unscrupulous operators ready to take advantage of unsuspecting debtors. A lawyer experienced in consumer credit or bankruptcy law can help protect debtors from these unscrupulous practices and advise them on the most prudent course of action.
Bankruptcy and its effect on your credit.
By federal law, a bankruptcy can remain part of a debtor's credit history for 10 years. Whether or not the debtor will be granted credit in the future is unpredictable, and probably depends more on what good things the debtor does in the nature of keeping a job, saving money, making timely payments on secured debts, etc., than the fact that the debtor filed bankruptcy. In some cases it may actually be easier to obtain future credit after bankruptcy, because new creditors may feel that since the old obligations have been discharged, they will be first in line. They also recognize that the debtor cannot again file bankruptcy for at least the next four years in the case of chapter 13 or eight years in the case of chapter 7. The truth is that if a debtor cannot pay his or her bills, and the debtor's credit is already ruined or exhausted, filing bankruptcy can actually be an important first step in re-building credit.