subject: Bankruptcy: Find Out The New Rules! [print this page] Bankruptcy: Find Out The New Rules! Bankruptcy: Find Out The New Rules!
If you are considering bankruptcy, it should be because all other options have been exhausted. Although bankruptcy can clear your debt, it will not only ruin your credit for 7 years, but it will stay on your record forever. Every lender who lends you money will be able to see, even once your credit is restored, that you at one point in time got so over your head in payments that you had to declare bankruptcy. They may wonder if it could happen again.
Declaring bankruptcy is not as easy anymore as it used to be either. Ever since October 17, 2005, new bankruptcy laws have come into play. Back in the day, it was relatively easy to declare bankruptcy, and you would have your debt wiped away, but now days, you have to go through qualification procedures to even declare bankruptcy! First, you have to prove that you do not have a higher income than the median household that is your same size. If you do, you will be required to take a means test.
A means test is a test of your expenses to see how well you are living within your means. All of your bills that are considered necessary will be added up (not all your bills, just the ones they deem necessary), then any money that is left over, they will most likely make you pay each month to pay off your debt, or at least a portion of it. Depending on how much money you have left over after the means test will determine how much of your debt you are to pay back. Therefore, you may find that you will need to start living with less so you can pay back your debt. However, if you have equity in your home, you could use that money to pay off your debt, or any other type money you have tucked away somewhere.
