BankruptcyDebt Relief and Bankruptcy Claims on the RiseWhen the bankruptcy laws changed in late 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act it was obvious that we would see a drop in the amount of bankruptcies. With over 1,700,000 non-business bankruptcies in 2005 it had dropped to just 777,000 in 2007. Business bankruptcy is also down only slightly because the new laws only affect personal bankruptcy.So far in 2008 bankruptcies are up only 20% over but expect this number to be higher once the final numbers are in. The main reason for the increase in bankruptcy is the economy. Unemployment is up nationwide and with the recent surge in price of oil the cost of all consumer goods is on the rise. As the economy continues to suffer we will see more bankruptcies and more people using debt relief services. What is Bankruptcy? Bankruptcy is when a person can no longer afford to pay their bills and they decide they would like to start over. For obvious reasons they will actually be starting in the negative when it comes to credit due to the fact that they showed terrible credit management in the past. Bankruptcy claims stay on your credit report and credit score for a very long time so it shouldn't be taken lightly. It is best to try everything you can to not claim bankruptcy but sometimes it's the only option. It is governed by the federal law and except for a few exemptions the same rules apply in every state. Types of Personal Bankruptcy Chapter 7 is far the most popular form of bankruptcy. This where someone is freed from outstanding debts and any non-exempt assets are sold in orders to pay creditors. Chapter 13 is a repayment plan for people with regular income and less then $336,900 in unsecured debt and secured debt less than $1,010,650. The Person will keep property and makes regular payments to the Chapter 13 trustee who will then pay the creditors. Some people are forced to claim bankruptcy because they can no longer afford their minimum payment or have already fallen behind and are being harassed by collectors and creditors. Usually this is due to job loss or health a related problem but it can be caused by poor budgeting habits. Many people don't realize how much we depend on credit and how many of us abuse it. 20 Years ago people looked at credit cards as a payment method today people use them as funding methods. Credit card debt for the average American family is at an all time high even if you take inflation into account. Other Debt Relief Options? Homeowners who have good credit should be able to get a debt consolidation loan but even that is a maybe given the current credit crisis. When you take out a debt consolidation loan you usually end up using your home as collateral, which is fine as long as you keep up regular payments. The downfall to this is if you stop paying your debt consolidation loan payments the creditors could take your home. Non-homeowners who are already behind on their payments may want to look at a debt settlement or negotiation service. This is where you and or a debt settlement company will negotiate with your creditors to have your total debt owed lowered. It can be a tricky process as banks want all of their money back nut it is possible. The only reason they will settle with you is because they suspect you might file for bankruptcy and they will end up with nothing. People who are not in serious debt but still are having concerns may want to look at a credit counseling service. The services can teach you better budgeting skills and it may look good with your creditors that you are trying to get your finances back on track. No matter what your situation is you can always use some help and advice. Many companies are now offering these services; just look in the yellow pages and you will find a few in your local area. You can also find lots of national debt relief companies online. Author-Bio: For more help and information
or to find a debt consolidation, debt settlement, or credit counseling
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