Generally speaking, in the United States today bankruptcy is considered a measure of last resort and virtually every other debt relief method out there – debt consolidation, debt settlement, and so on – is designed to help debtors avoid filing for bankruptcy. The old days when people could simply borrow extensively, default on everything and run to the bankruptcy courts for relief and debt discharge have been over since 2005, so virtually all efforts to reduce your debt or restructure it in order to make it more manageable are effectively ways of avoiding bankruptcy.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 mandated that all individuals considering filing for bankruptcy have to undergo credit counseling immediately – within 180 days – of filing their petition with the courts. This credit counseling has to be done through government approved credit counseling agencies which will carefully review your entire financial situation and determine whether or not bankruptcy is the right option for you to take. In fact, the bankruptcy court will not accept your petition unless you have a certificate issued by an approved credit counseling agency saying that you have undergone this counseling. The result is that you will have to have real experts review your situation and offer viable alternative to bankruptcy before you can even file a petition for Chapter 7 relief.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 also instituted a means test that determines whether or not you even qualify to file for bankruptcy. Prior to this, anyone could file for bankruptcy relief, and the court had the discretion to determine whether or not it was warranted, but the 2005 law did away with this. Now, if the court determines that your means are too high to qualify for bankruptcy protection you no longer qualify for this at all. The result is that bankruptcy is now sincerely a measure of last resort, and most people that qualify and get the approval of their credit counselors really have no other options available.
It is best to be proactive to address bankruptcy issues before they occur. Speaking to a bankruptcy lawyer can really make sense if you have debt issues. Learn how to get at at