National Legal Debt Centers, Inc. – Consumer Alert

New Bankruptcy Laws now in effect.

(PRWEB) October 20, 2005 -- While the banks and credit card companies are expecting to benefit from the new bankruptcy laws, many consumers and small business owners will find themselves in limbo. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, limits who can qualify for bankruptcy under Chapter 7, instead many filers will be forced into a Chapter 13 Repayment Plan. Unfortunately, most consumers however will be caught in between and left out in the cold.

Many of the major credit cards have doubled their minimum monthly payments to 4% monthly, adjustable rate mortgages have already started going up and foreclosures have increased 50% in the past two years and many student loans went up 2% last month. Consequently, the new bankruptcy laws will either drive many debtors into repayment plans they cannot afford, or leave them in limbo:

• The cost of filing for bankruptcy is now higher, which will be a real problem for many consumers. In fact, some may not have enough money to file and will lose important assets as a result.

• The new law will force some consumers to pay more money to their creditors than they would if they had filed under the old law.

• It takes away consumers’ discretion over whether to file a Chapter 7 or a Chapter 13 bankruptcy and applies a stringent means test to their income and debts in order to determine what type of bankruptcy they must file. The goal of the means test is to force as many consumers as possible into a Chapter 13, regardless of whether they can realistically afford to make payments on their debts. As a result, many consumers are apt to lose the very assets they hoped to hold on to through bankruptcy.

• Makes more debts non-dischargeable through bankruptcy. In other words, under the new law, regardless of whether consumers file for Chapter 7 or Chapter 13, they are likely to end up paying more money to their creditors than under the old law.

• It weakens the protections of the automatic stay, which prevents creditors and debt collectors from trying to collect from consumers after they file for bankruptcy. As a result, consumers who file for Chapter 13 will have a harder time holding on to their homes and cars and it will be easier for them to be evicted from their apartments and have their homes foreclosed on.

Most consumers do not know there are bankruptcy alternatives and that an attorney can help you avoid bankruptcy and negotiate a settlement of your debts. And, most people do not realize the difference between the various types of bankruptcy and could easily find themselves paying back a large proportion of their debt anyway, forced by the courts to make those payments. Some are even mandated into credit counseling programs and forced into a lengthy repayment plan. So they wind up with a bankruptcy and repay their debts anyway.

Though there are many different types of debt relief companies advertised, most creditors will not negotiate with them. However, an attorney experienced in handling clients debts, can act on your behalf and help you avoid the devastation of bankruptcy. There are alternatives:

Bankruptcy Alternatives

http://www.nldc.us/debtoptions.html

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