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

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

People around the world are so badly affected by the recession last year that they were not able to pay their monthly installments and lot of them lost their job. As a result they came under heavy pressure of debt. When they tried to overcome their loss by paying their debt, first method that came in their mind was bankruptcy. Bankruptcy was considered the first option in the past for getting rid of debts.

But bankruptcy has many negative impacts on the debtor personal life as well as on overall economy. Because when you file for bankruptcy you get bad financial scores and your financial activity almost stops for next 10 years. You do not have to pay anything to the creditor which causes him great loss and it damages the overall economy.

Recently Govt. has introduced some new rules in bankruptcy to discourage people from doing it. In past people were used to file chapter 7 bankruptcy straight away. In chapter 7 bankruptcy you are given a full concession from its due debts and debtor has to pay nothing to the creditor. To discourage it Govt. has introduced a law according to which, if anyone wants to file a chapter 7 bankruptcy he will first consult a canceler who will tell him about the negative impacts of bankruptcy and will tell him about alternatives available, then if the debtor is not convinced he will have to give a means test. If he qualifies in this test only then he will be able to file chapter 7 bankruptcy.

This law prevents many people from filing bankruptcy. Other than its financial disadvantages, bankruptcy has got many moral and ethical disadvantages too. The person who is bankrupt loses his caliber and respect in the business community. You can earn your money back but you have to work really hard for restoring your statue in the community.

In short bankruptcy is a bad choice for debt payment. There are many easy and useful methods these days, which help you in settling your due debts. One of them is debt settlement method. You can negotiate with your creditor and pay your loan in a decided time frame.

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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