How New Bankruptcy Laws Affect Debt Relief Options For Consumers
Bankruptcy is a method which helps debtors to come out of debt.
This method involves selling off the debtor's assets like house, car etc.
to raise funds in order to pay off his creditors.
The amount that cannot be paid off is then written off by the court.
This method provides a customer a way have a new financial start.
However, it also has its drawbacks.
The credit report of the debtor filing for bankruptcy will show bankruptcy for at least the next 10 years.
Hence he will find it difficult to get credit in the near future.
In the past many debtors had been abusing this method of debt relief.
They used this method to avoid paying their creditors.
If there are higher numbers of people filing for bankruptcy, it has a negative impact on the economy at large.
In order to stop this, there has been a considerable amount of change in the bankruptcy laws.
It is no longer easy for a debtor to qualify for bankruptcy under chapter 7.
Those who are not found eligible for bankruptcy under chapter 7 are then pushed to file under chapter 13.
Bankruptcy under chapter 13 is nothing but a court ordered repayment plan where the debtor has to pay back his creditors.
This recent change has given a boost to other debt relief methods which help the debtor in reducing his debt and finally eliminating them.
Some of the debt relief methods which have gained popularity since the change in the bankruptcy laws are.
Credit counselling, debt consolidation and debt settlement.
While credit counselling aims at a repayment scheme which will allow the debtor a reduced monthly payment, debt settlement aims at reduction in the total debt amount.
Debt consolidation helps the debtor to consolidate his loans and get a new loan with a reduced interest.
This method involves selling off the debtor's assets like house, car etc.
to raise funds in order to pay off his creditors.
The amount that cannot be paid off is then written off by the court.
This method provides a customer a way have a new financial start.
However, it also has its drawbacks.
The credit report of the debtor filing for bankruptcy will show bankruptcy for at least the next 10 years.
Hence he will find it difficult to get credit in the near future.
In the past many debtors had been abusing this method of debt relief.
They used this method to avoid paying their creditors.
If there are higher numbers of people filing for bankruptcy, it has a negative impact on the economy at large.
In order to stop this, there has been a considerable amount of change in the bankruptcy laws.
It is no longer easy for a debtor to qualify for bankruptcy under chapter 7.
Those who are not found eligible for bankruptcy under chapter 7 are then pushed to file under chapter 13.
Bankruptcy under chapter 13 is nothing but a court ordered repayment plan where the debtor has to pay back his creditors.
This recent change has given a boost to other debt relief methods which help the debtor in reducing his debt and finally eliminating them.
Some of the debt relief methods which have gained popularity since the change in the bankruptcy laws are.
Credit counselling, debt consolidation and debt settlement.
While credit counselling aims at a repayment scheme which will allow the debtor a reduced monthly payment, debt settlement aims at reduction in the total debt amount.
Debt consolidation helps the debtor to consolidate his loans and get a new loan with a reduced interest.
