Saturday, April 11, 2009
EFFECT OF NEW BANKRUPTCY LAW ON DEBT NEGOTIATION
Bankruptcy law has changed since October 17, 2005 by Congress. Now it is known as "Bankruptcy Abuse Prevention and Consumer protection Act" and this new law can prove to be very harsh for debt ridden American citizen.
Will the creditors agree to negotiate with the financially stressed person? What can be the possible effect of bankruptcy on debt negotiation practice? These questions are asked frequently after the new law was passed. The simple one word answer to these queries is "yes". Those who had no other option other than filing bankruptcy are worse affected. However, those who had plans other than bankruptcy like debt negotiation etc. will not be affected that much. In fact, this is what the credit card banks are waiting for since decades. As, according to them rich people used to take unfair advantage of the bankruptcy laws previously.
It has been found that bankruptcy filling increased after the new law was passed and on the other hand, profit of the credit card industry also increased. This new law is a boon to the credit card companies. It is estimated that approximately five billion dollar will be added every year to the industry's bottom-line. So the main thing is those who will be filling bankruptcy under chapter seven most of them now will be forced to file bankruptcy under chapter thirteen. Therefore, if not all then also many defaulters will have to pay a part of their outstanding to the creditors within a five-year timetable as laid down by the court.
Another harassing part in the new law is the IRS "allowable" expenses agenda to determine the monthly budget of any individual. Moreover, the person who is making a step forward to attempt a bankruptcy filing will also have restrictions on the things like mobile phones, cable T.V, internet as per IRS and Court.
Creditors already started to use this new bankruptcy law to harass people, as this new law is a real gift to the creditors. Still negotiations can be done because the creditors also do not know for which chapter a defaulter will qualify for. So for them negotiation is a better option.
Will the creditors agree to negotiate with the financially stressed person? What can be the possible effect of bankruptcy on debt negotiation practice? These questions are asked frequently after the new law was passed. The simple one word answer to these queries is "yes". Those who had no other option other than filing bankruptcy are worse affected. However, those who had plans other than bankruptcy like debt negotiation etc. will not be affected that much. In fact, this is what the credit card banks are waiting for since decades. As, according to them rich people used to take unfair advantage of the bankruptcy laws previously.
It has been found that bankruptcy filling increased after the new law was passed and on the other hand, profit of the credit card industry also increased. This new law is a boon to the credit card companies. It is estimated that approximately five billion dollar will be added every year to the industry's bottom-line. So the main thing is those who will be filling bankruptcy under chapter seven most of them now will be forced to file bankruptcy under chapter thirteen. Therefore, if not all then also many defaulters will have to pay a part of their outstanding to the creditors within a five-year timetable as laid down by the court.
Another harassing part in the new law is the IRS "allowable" expenses agenda to determine the monthly budget of any individual. Moreover, the person who is making a step forward to attempt a bankruptcy filing will also have restrictions on the things like mobile phones, cable T.V, internet as per IRS and Court.
Creditors already started to use this new bankruptcy law to harass people, as this new law is a real gift to the creditors. Still negotiations can be done because the creditors also do not know for which chapter a defaulter will qualify for. So for them negotiation is a better option.
Posted by Saul at 4:22 AM
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