When the modifications to U.S. Bankruptcy Code made it more difficult for people to declare bankruptcy and have debts forgiven, many consumer rights activists cried foul. The credit industry worked hard to get this passed, and at first blush, it does appear to work against debtors.

On the other hand, the changes did debtors a favor in some respects. By making it harder to seek bankruptcy protection, the new laws made it mandatory that those who might not need to declare bankruptcy go through credit counseling and enter a repayment plan if possible. The changes also revealed just how desperate creditors are to keep your debts from being written off completely. Armed with that knowledge, there are ways to avoid bankruptcy and right your personal financial ship.

Pennies on the Dollar

Everyone has seen or heard ads for law firms or other agencies that will work with creditors and settle your debts for virtually nothing. This can happen, but there are some caveats. One is that many such agencies are not reliable or trustworthy. If they are full-fledged law firms, they will have some oversight from the state supreme court's disciplinary counsel, as well as the local bar association. Even so, be wary and investigate before signing on with anyone.

Further, these agencies collect your money for a time without paying your creditors. Your accounts will get further behind while you pay them, knocking your credit score down nearly as much as a bankruptcy would. If you are struggling to make ends meet but paying on time or nearly so, this is a fairly unpalatable option.

Finally, to the extent that these agencies do help, you may be able to do the same for yourself. While some creditors are more willing than others to settle for lower dollar amounts, any of them would rather take something than nothing. Thus, if you are already that far behind, you might try saving yourself some fees that would be charged by the agencies by negotiating for yourself.

Credit Counseling

An adage that has been unfairly applied to lawyers is true in the area of credit counselors; 99 percent of them give the rest a bad name. Class action suits against these groups abound, and internet message boards are full of angry stories. A good credit counseling agency can help immensely.

The way such agencies work is to work out a payment plan with you based on what you can afford. They then apply it to paying off your creditors based on preset rate reductions. They are funded by the credit industry, which is a major turn off for some people. However, the credit industry pays them to do something that helps the consumer; they help you pay your accounts off, at a lower interest rate than you might get otherwise.

Again, many of these agencies are unreliable, paying late or not at all. Many creditors, upon your telling them you plan to work through a credit counseling agency, will try to talk you out of it for this reason. When they do, listen. You may be able to work out a better deal for yourself than the agency could. The creditors want to be paid to the extent possible; they have no incentive to ruin your credit by forcing you into bankruptcy.

If you do decide to go through a credit counselor, investigate first. Is the agency accredited? What complaints against them have been filed with the Better Business Bureau and how have they been resolved? Find a place you can trust.

Conclusion

There are ways to avoid bankruptcy in most cases. If you have lost everything with uninsured hospital bills, that is one thing. Being behind on your bills and overextended on credit need not push most people over that edge. Creditors want you solvent so they can collect something; you want yourself solvent so you can obtain credit again someday. The U.S. government wants you solvent so you can contribute to the economy. Look into your options and you will learn that you can usually find your way out of the bankruptcy hole before you hit bottom.

Author: Jeffrey Dean

About the author:
Jeffrey Dean is a copywriter for Yodle, a business directory and local online advertising company offering practical advertising solutions. Find more bankruptcy information at local.yodle.com/articles. Is Bankruptcy the End of the Road? Legal Advice You Can Use to Climb Out of the Hole

Article source: Free Bankruptcy Articles.

According to a report released by the National Bankruptcy Research Center, personal bankruptcy filings are up 34 percent in January 2009 as compared to January 2008. Compared to the previous month, December 2008, filings were up 4.5%.

These increases are no doubt a consequence of the current economic crisis. The National Bureau of Economic Research (NBER) reports that the United States' economy entered recession in December of 2007.

Traditionally, recession has been defined as two quarterly declines in gross domestic product, but the Business Cycle Dating Committee of the NBER has taken a more comprehensive approach to defining recession. 'A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.'

Justin Berton, San Francisco Chronicle staff writer, wrote an article titled 'Economic Woes Lead to Bankruptcy Boom,' in the January 13, 2009 edition. He reports that membership in NACBA, the National Association of Consumer Bankruptcy Attorneys, has increased by one third in 2008 to 3,200 practicing attorneys.

In 2005 bankruptcy filings skyrocked to over two million non-business filings, due mostly to anticipation of the Bankruptcy Reform Act of 2005, which took effect on October 17, 2005, making filing bankruptcy much more difficult.

Those who were in poor financial shape had a strong motivation to file bankruptcy before the new law went into effect, rather than to try to work their way out of debt, since they would no longer have the insurance policy of bankruptcy after October 2005.

The Bankruptcy Reform Act of 2005 increased the amount of work it takes to file and decreased eligibility. Filers are also now required to take credit counseling and debtor education classes. Filings in 2004 had actually decreased to 1.56 million filings from the 1.625 million filings in 2003.

In 2006, predictably, bankruptcy filings crashed. Two effects were causing downward pressure on filings. First, filing demand had been cannibalized because many of those who would have, in the absence of the reform act, waited to file in 2006 were motivated to file in 2005 to avoid the restrictive new laws. Second, the restrictive new laws simply made many who previously were eligible to file ineligible.

What the credit card lobby took away through the Bankruptcy Reform Act, the tanking economy has given back. Many more United States citizens are now eligible to file bankruptcy, though no doubt, they're not happy about it.

Author: David B. Zwiefelhofer

About the author:
David Zwiefelhofer provides bankruptcy attorney services across the United States.
For help filing bankruptcy in Arizona, contact a Phoenix Bankruptcy Attorney. In Milwaukee, Milwaukee Bankruptcy assistance.

Article source: Free Bankruptcy Articles.

In Australia, after you are declared bankrupt, it is still possible to travel overseas during the period of your bankruptcy, provided that first you have obtained the written permission of your bankruptcy trustee to do so.

While this requirement may seem a bit daunting at first reading, in reality it need not be a serious impediment for you to do so, although in a media release dated 23/07/07 the government reported that prosecutions had been initiated where bankrupts had attempted to travel overseas without first obtaining permission from their bankruptcy trustee. No numbers were mentioned.

Overwhelmingly, over overwhelmingly the bankruptcy trustees seem to grant this permission provided that they are satisfied that the bankrupt is not trying to skip the country so as to avoid their responsibilities to the trustee in the administration of the bankruptcy.

Before permission will be granted you need to be able to meet any other current obligations to your bankruptcy trustee, particularly those that relate to any contributions that you are paying if your income is over the current Threshhold Amounts. These will have to be paid advance before you go. To determine this your bankruptcy trustee will want to know the details of your current income.

The official government line is that you need to have legitimate reasons for the proposed travel, for example, that the travel is for compassionate reasons or is a condition of your employment. I've never heard of any person not being given permission to go on the grounds that the trip was for a holiday.

I advise bankrupts to contact their trustee, in writing, about a month to 6 weeks beforehand, advising where you wish to go, the dates that you wish to leave and will return, and for some reason best known to the people who make up these rules, who is paying the fare? If someone else is paying, your trustee will need a confirming letter from that person.

Your will need to supply your trustee with an email address, telephone number and overseas contact address.

Then there's the big stick, and I wonder why they bother. The officials in charge also write that 'breaching a travel condition imposed by your trustee is also an offence under the Bankruptcy Act, with the penalty for this being up to 12 months imprisonment.'

In looking at media releases about bankruptcy prosecutions, I could find none reported in all 2007, and up to the end of September 2008 that related to bankrupts actually breaching travel conditions.

Author: Fred Appleton

About the author:
For more than 10 years Fred has helped people understand and deal with bankruptcy from the point of view of the person owing the money. Fred has helped thousands of people sort out their debt problems. From what people have told Fred, over the years, he is certain that bankruptcy can save lives and marriages too.
http://www.fredappleton.com.au

Article source: Free Bankruptcy Articles.