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The U.S. Constitution provides a method whereby a person, burdened by excessive debt, has a right to a "fresh start" and pursues productive lives unimpaired by past financial problems. It is an important alternative for people strapped with too much debt and stress than a person could tolerate physically and emotionally. The federal bankruptcy laws were established to offer honest debtors with a fresh start and to enable an agreement with all the creditors fighting for the debtor's remaining resources. Bankruptcy helps people avoid the kind of permanent discouragement that can prevent them from ever re-establishing themselves as hard working members of society. To the extent that there may be money or property available for distribution to creditors, creditors are ranked to make sure that money or property is fairly distributed according to established rules as to which creditors get what. Bankruptcy law can be complicated and there are several considerations that must be taken into account in making the determination whether or not to file. If you are thinking about filing a bankruptcy, we encourage you to keep an open mind and make no decision about debt relief without seeking the advice and assistance of an experienced bankruptcy lawyer.

Bankruptcy and Credit - Federal law enables creditors to report a bankruptcy for ten years. Previous laws only permitted seven years of reporting but new laws stretched the BK reporting to ten years for credit reporting purposes. Many credit specialists recommend that you access and review your credit report every few months for errors or inaccuracies. This can be very important if you are in the process of reestablishing credit after a bankruptcy or foreclosure.

Consumer Debt Remains Consistent with Bankruptcy Filings -Federal Reserve released a report indicating that household debt has hit record highs. The disposable income has declined while the levels of revolving debt has increased dramatically. Some analysts are concerned that this unprecedented level of debt might pose a risk to the financial health of American households. A high level of indebtedness among households could lead to an increased delinquency and bankruptcy rate for homeowners nationally. This is a good indication that mortgage lenders while continue to tighten underwriting guidelines while home foreclosures continue to mount.

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Bankruptcy Attorney Nation Find a Bankruptcy Lawyer locally with our debt relief directory and get a free BK evaluation for a loan modification, chapter 7, 11, 13 or debt settlement that could lead to a fresh start. Find out if bankruptcy is the best for your situation.

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Credit Counseling: Consumer Credit Counseling (CCC) companies are organizations that operate nonprofit financial counseling programs. Typically they will charge a fee for their services and they attempt to work with your creditors in order to reduce your interest rates and your minimum monthly payments.

Bankruptcy is not as time-consuming as it once was, however it is more complex because of the laws signed into effect in 2005. To prevent paying an absorbent amount in legal fees, make sure you work with companies like Bankruptcy Attorney Nation. With chapter 7 you are able to completely eliminate unsecured debt.

Unsecured Debt Consolidation: Debt Consolidation is the replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. Unfortunately the credit markets have tightened in recent months and if your FICO credit score is less than 660 it will be extremely difficult to impossible to qualify for a debt consolidation loan.

Cash Out Refinance: This involves taking the equity from your property to consolidate your debts. The interest rate you pay for mortgage loans is typically tax-deductable, and you could end up saving in the long run. Just make sure you can afford the higher mortgage. And, it would probably be best to go through FHA or VA for your refinance.

Conventional lenders have tightened their credit standards, and with the problems you're currently having, you probably won't qualify for a conventional loan. But, FHA has much more lenient standards, so you could still be eligible for FHA cash out refinancing if you have enough equity in your home.

Debt Settlement: Debt Settlement can be a cost-effective solution to getting out of debt. Often referred to as debt negotiation, debt settlement is an aggressive approach to debt reduction and it is best suited for individuals only other choice is filing for bankruptcy.

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Do you want to learn more about debt relief, bankruptcy, consumer credit counseling, and debt settlement? Read these featured articles below for the latest in the debt news.

New Bankruptcy Laws - The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), also known as the new bankruptcy laws, was signed into law by President George W. Bush on April 20, 2005. These laws were designed make it more difficult for consumers and businesses to file under Chapter 7 bankruptcy, under which most debts are forgiven (discharged), and instead be forced to file under Chapter 13. Under Chapter 13, filers are put in a repayment plan rather than having many of their debts discharged. The new law increases the amount of paperwork involved in filing and raises the filing fees for debtors earning 150% of the federal poverty level or more. In addition, lawyers representing bankruptcy filers are now required to conduct an investigation of their clients' filings and can be held personally liable for inaccuracies.

What is Loan Modification? - Loan modification, also known as note modification, is a modification to the terms of an existing loan made by a lender in response to a borrower's long-term inability to repay the loan. Loan modifications typically involve a reduction in the principal balance, the mortgage lender changing the terms on an existing mortgage, the lender granting an extension of the of the terms or otherwise changing the terms without refinancing. Loan modification is an extreme form of foreclosure prevention. But, with lenders being overwhelmed with foreclosures and defaults, you'd be surprised at what settlement you could obtain. We recommend that you retain a real estate attorney that specializes in loan modifications because the lawyer can use advanced legal techniques to achieve the most aggressive results for you. Plus, you stand a much better chance of qualifying for a loan modification with an attorney's assistance. Most real estate lawyers will know what mortgage lenders look for in the hardship letter (probably the most important document in your loan modification request) and how to fill out the forms to meet the lender's strict qualification guidelines.

Additional Chapter 7 Requirements under New Bankruptcy Laws

In order to file for a Chapter 7 bankruptcy, you must first measure your "current monthly income" against the median income for a household of your size in your state. If your income is less than or equal to the median, you can file for Chapter 7 bankruptcy. If it is more than the median, you must pass the means test, which determines if you have enough disposable monthly income (DMI), after subtracting certain allowed expenses and required debt payments, to make payments on a Chapter 13 plan. If the income that's left over is less than $100, you can still file under Chapter 7. Otherwise, you'll have to file under Chapter 13.


Additional Chapter 13 Requirements under New Bankruptcy Laws

In addition to having to go through mandatory counseling, there are increased compliance requirements for small businesses filing for Chapter 11 bankruptcy. The new law increases the bureaucratic compliance obligations and shortens the deadline for Chapter 11 reorganizations involving small businesses, a series of new requirements not applicable to larger businesses.

All Chapter 7, 11 and 13 files also have to undergo a second counseling session towards the end of the bankruptcy case. This one is for learning personal financial management. Only after filers submit proof to the court that this requirement was fulfilled can the bankruptcy case be completed and closed.

Additional Chapter 13 Requirements under New Bankruptcy Laws

Under the old rules, people who filed under Chapter 13 had to devote all of their disposable income (what they had left after paying their actual living expenses) to their repayment plan. Now, the disposable income is now calculated using allowed expense amounts dictated by the IRS, rather than your actual expenses. And, these allowed expenses must be subtracted not from your actual earnings each month, but from your average income during the six months before filing.

Any attorney practicing bankruptcy is now required to state: We are a debt relief agency and help people file bankruptcy under the bankruptcy code.

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