Mandatory
Credit Counseling for Those Considering Bankruptcy
Most Americans are aware of the sweeping changes in U.S.
bankruptcy law that were made by Congress recently. These changes, strongly
supported by the credit card industry, were designed to make it more
difficult for Americans to file for bankruptcy under Chapter 7 of the
Federal bankruptcy code. Chapter 7 allows consumers to essentially have all
of their debts wiped away by the court. While many people will still be able
to file under Chapter 7, many more will have to file under Chapter 13, which
requires the establishment of a repayment plan. A less publicized provision
of the bankruptcy bill is the one that requires debtors who are considering
filing for bankruptcy to first undergo credit counseling. What does this
mean for consumers?
Actually, the details are
not yet known. The law, which takes effect on October 17, 2005, does
require that debtors considering bankruptcy receive credit counseling at
least six months before filing for bankruptcy. The law also requires that
they receive additional counseling before the case is finalized and that
any agency providing counseling services must charge an undefined
“reasonable fee.” Other than that, there are no details yet. The portion of
the law that deals specifically with credit counseling hasn’t yet been
written, and the full details are not expected to be released until
mid-summer. Even those who work in the credit counseling industry do not
know what will be expected of them once the law takes effect.
For consumers with problem debt, this confusion is only making a bad
situation worse. In the Fall, more steps will be required of those filing
for bankruptcy, but no one knows what those steps are, what they will cost,
or how involved they will be. Anyone who has a current financial situation
that they feel may lead to bankruptcy would be well advised to consider
filing now. Bankruptcy should be considered a last resort for those with
problem debt, as a bankruptcy filing will stay on a credit report for at
least ten years. If bankruptcy appears inevitable, however, filing now will
probably be easier, cheaper, and faster than filing after the new law takes
effect in October.
Copyright 2005 www.bankrupt-c.com
This site is used for information purposes only. Click below for details of
our policies. Privacy Policy |
Contact Us
| Disclaimer
