The overhaul of the bankruptcy code in October of 2005 made filing bankruptcy far less consumer friendly and now offers fewer benefits for the typical consumer. Before the code was changed, most bankruptcies were directed toward chapter 7’s where debts were dismissed and consumers could wipe the slate clean and start over again.

The new version of the code requires consumers to take a state means test to determine which bankruptcy that consumer qualifies for. Consumers with incomes above the state mean (average), are now directed toward filing chapter 13 bankruptcy, which is far more invasive, lengthy, and restrictive than a chapter 7. Where debts were dismissed in a chapter 7 filing, consumers now have a “work out” phase, often overseen by a trustee, where payments are made to the various creditors. Work outs can take anywhere from three to six years to be completed.

While many of the advantages of filing bankruptcy no longer apply, the disadvantages of filing personal bankruptcy remain firmly in place. A bankruptcy filing stays on your credit record for up to 10 years, and stays on your public record for life. The public record is normally posted in local newspapers for the consumption of neighbors, friends, and other parents. In many bankruptcies, a court appointed trustee monitors spending to make sure that monies are directed to paying off creditors.

A bankruptcy on your credit record (7-10 years), will pose a big hurdle when applying for any kind of credit. Additionally, even after the bankruptcy is removed from your credit record, the public record remains accessible to anyone that wants to request it. That report can influence job and credit applications for a lifetime.

Due to the lack of benefits and long list of disadvantages, filing bankruptcy is now seen as an option of last resort. If you are contemplating a bankruptcy filing, call Debt Settle, Inc. at (866) 985 7388. Together, we’ll take a look at your situation to see how you can get the best solution available.