Filing for bankruptcy is an emotionally tough choice for any individual to make. Most people think that filing for bankruptcy will simply wipe out all of their debt. However, the new bankruptcy laws that were passed in 2005 make it very difficult to wipe out your debt and get a “fresh start.” The new laws favor the banks greatly and in most cases force the debtor into unreasonable repayment plans.

The Pitfalls of Chapter 13 Bankruptcy

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 was one of the more significant legislative changes to personal finance passed by the United States Congress in recent history. It made sweeping changes to American bankruptcy laws, affecting both consumer and business bankruptcies. Many of the bill’s provisions were explicitly designed to make it “more difficult for people to file for bankruptcy.” The BAPCPA was intended to make it more difficult for debtors to file a Chapter 7 Bankruptcy—under which most debts are forgiven—and instead required them to file a Chapter 13 Bankruptcy, under which their debts are discharged only after the debtor has repaid some portion of these debts.

This typically can cause most individuals to default on their Chapter 13 plan. Many attorneys won’t explain the possible outcomes of the eventual trustee’s payment. Many will steer around the issue, which will only cause problems for you down the road. They also don’t explain the long term credit damages that incur. It typically takes 7 years to completely recover from a credit perspective. Individuals also face the inability to obtain any financing or even lease an apartment.

Do you really need to file bankruptcy?

Many people file bankruptcy for all the wrong reasons. They do not explore the many options to avoid bankruptcy and get a fresh start. In short, filing for bankruptcy is short term satisfaction and long term pain. The 2005 Bankruptcy reform act was passed to encourage more individuals to explore voluntary options of debt repayment. Please call us at 877.297.7011 for a free detailed debt consultation and to review all of your options.

If it is determined that bankruptcy is the proper path for you to take, we can certainly refer you to the appropriate attorney to handle the case. We have a full network of experienced bankruptcy attorneys across the country.