There are times when you land yourself in a position where you lose the entire difference between your monthly expenditure and monthly income. This financial trouble can happen anytime in your life and can cause all your creditors to pursue harsh collection activities against you. If you are not able to cope up with the financial troubles, then the only solution that remains is filing a case of bankruptcy, which can bring a relief for your tensions. Bankruptcy can affect your personal and professional life in future that can affect the later borrowing capacity and credit rating options. Various alternatives can be followed other than filing a case of bankruptcy.
There are reasons for many who are not willing to file a case of bankruptcy that can take away the loss of personal assets like cars, houses and personal property. Bankruptcy can sometimes affect your career prospects depending upon what line of work you are in. It can have heavy restrictions for getting future loans and credit for the next 7 years. It becomes difficult to get any loan with a poor credit score. Bankruptcy can create an embarrassing situation for a person. A person who has suffered huge losses because of business, job issues, divorce, personal finances and college finances may force bankruptcy. However before considering the option of filing one should first examine various alternatives of bankruptcy.
The Bankruptcy Abuse Prevention and Consumer Protection Act came into force in 2005 and made the filing of bankruptcy not as easy as it used to be. It makes the debtor considers certain alternatives for those suffering from financial burdens.
Means Test- Through this act, if the debtors monthly income exceeds the median monthly income for that state he is now exposed to having to qualify under a means test to be eligible to file for bankruptcy.
Credit Counseling- The debtor is now required to complete a credit counseling course from an approved credit counseling agency prior to a bankruptcy discharge.
Waiting Period- If the debtor has previously filed a chapter 7 bankruptcy the waiting period to file again has been extended.
The Bankruptcy Abuse Prevention Act has made debtors consider alternatives to filing for bankruptcy. However if you are heavily burdened by financial debt and you have no other options than bankruptcy, you are not alone. Consult with a bankruptcy attorney and explore the remedies and peace of mind that filing for bankruptcy offers.