There are numerous reasons why debtors cannot declare bankruptcy online. One of the most common is that petitions must be filed with the court. Another requirement is that debtors must attend a 341 creditor meeting in person to develop a repayment strategy. The new bankruptcy laws also mandate that debtors adhere to specific guidelines.
In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect as a deterrent for consumers seeking financial relief due to irresponsible spending. Prior to BAPCPA, petitioners frequently sought protection under Chapter 7, which permits debts to be discharged. The preponderance of debtors must seek assistance under Chapter 13 today.
In Chapter 13 bankruptcy, debtors are permitted to retain valuable assets. This chapter is frequently utilized by homeowners confronting foreclosure, as filing for personal bankruptcy enables them to halt foreclosure and reorganize their debts.
In order to determine the amount of debt that must be repaid, petitioners are subjected to a ""means test"" that compares their income to the state's median income. Generally, debtors with incomes above the state median are required to file Chapter 13 and submit a payment plan. Those with incomes below the median may qualify for Chapter 7 assistance.
Filing for bankruptcy requires the assistance of a qualified bankruptcy attorney. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) altered the rules for attorneys and now requires them to submit a certified statement proving the need for court protection to restructure outstanding debts.
The Bankruptcy Abuse Prevention and Consumer Protection Act also requires debtors to undertake credit counseling through a U.S. Trustee-approved agency. In order for the court to approve a petition, petitioners must submit a certificate of counseling completion.
Once a Chapter 13 payment plan has been established, debtors submit payments to the bankruptcy trustee until all debts are paid in full. Chapter 13 plans typically last between two and five years and can place petitioners under significant financial strain.
Payments under Chapter 13 are in addition to regular monthly expenses. Financially struggling individuals frequently find it difficult to adhere to payment arrangements. An estimated 80 percent of petitioners fail to emerge from bankruptcy within the first year due to their inability to adhere to the rigorous payment schedule.
There are two methods petitioners may be denied discharge from bankruptcy. If payments are not made, creditors may petition the court for dismissal of the case. Alternatively, the trustee may notify the court of noncompliance. In either case, petitioners lose court protection and are held liable for outstanding debts, both of which can have devastating consequences.
A personal bankruptcy can remain on credit reports for as long as ten years, preventing debtors from obtaining credit for a number of years. Typically, it takes two to three years for debtors to qualify for financing or credit cards. In addition, it is prohibited for debtors to incur new debt while their bankruptcy plan is in effect.
Before submitting a bankruptcy petition, careful contemplation is required. Debtors should conduct online research to determine whether there are alternatives to bankruptcy that can produce the same results without the severe penalties. Alternative solutions could consist of credit counseling, budgeting, debt consolidation, or debt settlement.""
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