Is Filing for Bankruptcy The Only Way Out?

While bankruptcy filings have decreased since the bankruptcy legislation was altered, the number of people who are in debt have not decreased at all. In fact, during the second quarter of 2007, more than 130,000 have filed for Chapter 7s. While President Bush had aimed to ban serial filers and individuals who try to go around the system, the reality is that the new legislation has been a bane to many US citizens who have been affected negatively by the bad economy. With the advent of the mortgage crisis, tons of home owners who have adjustable rate loans as well as other sub-prime related products have fallen into hard times.

Not a few US citizens also face the prospect of losing their homes. While Congress is scrambling to pass another to help those saddled in debt, hundreds of thousands are dealing with bankruptcy. According to a Bankruptcy website, 2 out of 3 individuals who have filed for bankruptcy no longer have jobs. On the other hand those who have filed for bankruptcy are also facing with major health concerns.

The new legislation is primarily a way to determine if one has adequate disposable income through subtraction of allowed expenses and prerequisite payments of debt, and if these are enough to pay on the Chapter 13 plan. Before this legislation came up anyone can just apply for a chapter they think is appropriate. Another new feature is people should enroll in credit counseling before filing for bankruptcy. This is a way to educate people on how filing for bankruptcy can help in one’s finances.

The new legislation likewise imposes new requirements for lawyers. Among them is the need for the lawyer to personally attest to the truthfulness of all the information that their clients gave them. The problem is with this new legislation, a lot of lawyers who specialize in this particular field have left for other practices.

Another new feature of bankruptcy mandates that IRS commands what the allowable expenses are, and not the true living expenses of an individual. Simply put this means that persons with higher figures in terms of IRS standard living expenses need to be more cautious with their expenses.

The lack of options for consumers has led to the proliferation of companies that provide resources for debt relief. These debt companies could be the best resource to those individuals who are saddled with large debt.