Bankruptcy Vs Debt Settlement - Why it is Now Harder to Clear Debt Through Bankruptcy

The economy of America was impacted negatively due to insolvency

. People filed insolvency in order to gain freedom from liability issues; although they got what they wanted but the effect of happiness remained for a very low period of time as people soon realized that bankruptcy has ruined their lives. To control the negative impact of bankruptcy on the American economy and public; the government altered the rules and regulation of filing insolvency. The new laws had made it harder for a potential bankruptcy filer to file for it.

According to the new bankruptcy law; a person has to undertake counseling before filing for it. In this counseling tenure; the advisor tries to discourage debtors from filing for insolvency by informing them about the long term disadvantages of filing it. This liability elimination method is considered unethical but not illegal. This is because those who file under chapter 7 do not have to make any repayment of the debt and gains complete relaxation from entire loan issues. The creditors suffer a huge loss. Due to this reason this method has been divided into two chapters in order to discourage people from going for this option.

According to new laws of insolvency; a person has to qualify before filing for chapter 7 or chapter 13. This qualification test is known as means test and through this test it is determined whether the filer should file under chapter 7 or chapter 13. Even those people who can repay their liability amount even pursue insolvency because they feel they can get out of huge amount of liability issues without paying a penny.

The counseling services that one has to obtain before filing informs the potential filer about the entire process and through these counseling services people gain information and guidelines of managing finances. Whether you go for chapter 7 or chapter 13; these counseling services are compulsory. The government has tried to stop people from filing under chapter 7 as due to chapter 7; the creditors lost interest in lending money and this was affecting the economy of America.

Bankruptcy has created too many issues which have not yet been resolved. This should be your last option; when all other options have failed you then only you should go for this option. Take proper professional consultants help and then determine which option to select to solve liability issues. Liability settlement has proven to be the best alternative and the government is even providing support to this method.

Debt settlement is a legitimate alternative to bankruptcy and can make financial sense for consumers with over $10k in unsecured debt.

Bankruptcy Vs Debt Settlement - Why it is Now Harder to Clear Debt Through Bankruptcy

By: Brigham Baldwin

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