National Legal Debt Centers, Inc. – Consumer Alert

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New Bankruptcy Law - Alternatives Are Available

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which passed the Senate on Thursday and is expected to pass in the House of Representatives, limits who can qualify for bankruptcy under Chapter 7 of the bankruptcy code, because it permits them to erase their debts after forfeiting their assets. Instead many filers will be forced into a Chapter 13 Repayment Plan.

There are alternatives. 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!

Although some types of bankruptcy may get rid of unsecured debts completely and help stop foreclosure on your home, stop garnishments by creditors and debt collection activities, be aware that there are still many areas it does not help with. Bankruptcy will normally not help in areas like child support, alimony, current taxes, and most government-backed student loans, etc.

On top of this, you have also just ruined your credit for the rest of your life. Not only does bankruptcy stay on your credit report for 10 years and stay in the court records for 20 years, but many people do not realize that applications for home loans and many employment forms require you to answer the annoying question: "Have you ever filed for bankruptcy?" So, in effect, it follows you for the rest of your life. A bankruptcy can also hinder you in many major areas of your life, such as finding a job, buying or even renting a home, acquiring insurance, security clearance and buying or leasing a car. It should be considered as an absolute last resort.

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. 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.

Before you decide to do a bankruptcy, explore your options:

Bankruptcy Alternatives

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

Debt Elimination Scams... Fraud Warning

http://credit.about.com/od/shamsandscams/a/082504.htm

FTC Consumer Alert:

Advertisements Promising Debt Relief May Be Offering Bankruptcy http://www.ftc.gov/bcp/conline/pubs/alerts/bankrupt.htm

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Jonathan Hernandez
NLDC
818-238-0036
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