Credit Card Debt Bankruptcy - How New Bankruptcy Laws Make It Less Advantageous

Credit Card Debt Bankruptcy - How New Bankruptcy Laws Make It Less Advantageous

Are you thinking of filing bankruptcy to get rid of your Credit Card Debt? Think again... because of the new laws by the American government bankruptcy is no more a trouble-free procedure as it used to be in the earlier period. Let us try to find out how the new laws by the government have made it less advantageous.

Bankruptcy is a state of affairs in which a debtor legally declares its failure to repay its debt to the creditor. It was a suitable way to get rid of your debt in the early times as the debtor had to pay nothing, even companies able to pay their debt back also used to file bankruptcy but due to the new laws the genuine defaulter will think twice before opting for it.

These days bankruptcy is considered to be the last remedy for a debtor because of the huge fees of the solvency companies, colossal paperwork and enormous time taken by the court proceedings; and in the end you get bad credit rating which vanishes any chances for getting debt in future. In addition to unstable financial status, it also spoils your social image as you don't have to pay a penny to the creditor and get cleared of debts, which is an unethical approach.

Government has made major changes in the laws for filing bankruptcy. In order to file bankruptcy a debtor must qualify for the Chapter 7 i.e. debtor has to take a means test if his income is more than the median income of his test. In short, the debtor has to demonstrate that he has more or less no income.

If a debtor does not qualify according to chapter 7 and is still interested in bankruptcy he is forced to go for the Chapter 13 is somewhat similar to the debt settlement programs but has far more drastic effects on the credit rating of the debtor.

Not like the past, bankruptcy is a stressful and not so easy thing to do now only because of the new laws made by the Federal Government. That is why the other options like Debt Settlement are becoming more and more popular, as these programs are very convenient and you can gracefully pay a reduced amount of your debt according to your comfort.

Debt settlement is a legitimate alternative to filing bankruptcy. Consumers can expect to eliminate around 50% of their unsecured debt with the help of a legitimate settlement program. With the new FTC laws recently passed in July 2010, debt settlement is a much less risky option. If they don't settle your balance you don't have to pay a dime.

Check out the following link for free help from a certified debt relief specialist:

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