Debt Settlement Vs Bankruptcy - How New Federal Laws Favor Debt Settlement?


Bad management and poor resource handling can give you tough time in shape of debts. There are thousands of families and individuals who are buried under debts and are waiting for the moment of relief. If you are one of them then this is the right time for you. Credit card companies charge huge interest rates on the debt due to which these debts keep on increasing day-by-day. To help the people in this situation, the Federal government has made new laws to provide relief to the credit card holders.

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Before this new law, people were going for filing bankruptcy. They were many cases when people having enough resources to pay the debts also filed petitions. In this way, they misused law of chapter 7 of bankruptcy. That is why in the new law; chapter 7 has been made almost impossible. This is done So that more and more people can be encouraged to do debt settlement instead of filing for bankruptcy. On the other hand, debt settlement was encouraged by different statements of that law. This new law was made to help both creditors and debtors. When a person goes for bankruptcy and his case is not rejected then Credit Card Company gets almost nothing in return. Creditors are mostly afraid of this situation. Similarly, it may seem easy to file a petition but it is very hard to bear the circumstances arising from bankruptcy. So avoiding bankruptcy is beneficial for both parties.

According to the new law, file work was increased incase of bankruptcy. Fees of registration were also increased. All the attorneys are advised to provide correct information and if they are found guilty then the court can take severe action against them. Due to this, attorneys also increased fees because of increasing responsibility. The time interval between two consecutive petitions was also increased. On the other hand, chapter 13 of bankruptcies is made easier because it involves dealing with credit consolidation. So, people are encouraged to file for chapter 13 of bankruptcy because they have to pay.


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