While it would be helpful to file bankruptcy online, this option is not yet offered. However, other essential elements of the process can be obtained via the Internet such as learning about new bankruptcy laws, downloading financial worksheets, and locating legal counsel.
Although debtors cannot file bankruptcy online, numerous tools and resources are available that can expedite the process. One of the first considerations is becoming educated about the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). These new bankruptcy laws forever changed opportunities for obtaining debt help.
BAPCPA is complicated and confusing. While there is no law requiring debtors to obtain legal counsel when filing personal bankruptcy, trying to go it alone can be a costly mistake. Beware of do-it-yourself bankruptcy kits, law firms soliciting by mail or phone, and agencies offering packages for a few hundred bucks.
The new laws are stringent and those who fail to comply will likely lose their chance of approval. Spend the money on a good bankruptcy attorney who has a solid grasp of BAPCPA guidelines.
Personal bankruptcy encompasses two chapters 7 and 13. Prior to BAPCPA many people chose Chapter 7 because it eradicated outstanding debts. Chapter 7 requires debtors to liquidate non-exempt assets through a trust established by the court. Assets are returned to the lienholder or sold to pay off debts. Remaining balances are discharged and debtors can start afresh.
A lot of people racked up enormous credit card bills and filed Chapter 7 to eliminate debt. To curb that activity BAPCPA includes guidelines that require debtors to reorganize debt by establishing Chapter 13 payments.
Courts determine which chapter debtors qualify for by calculating earned income vs. state income levels. Debtors earning above median levels are normally ordered to enter into Chapter 13, while those earning less may qualify for Chapter 7. BAPCPA guidelines are provided via the U.S. Trustee website at Justice.gov.
Chapter 13 payments can last up to 5 years. This often places serious financial restrictions on debtors who are already struggling to make ends meet. Before heading to the court, debtors should spend time investigating bankruptcy alternative programs such as debt consolidation or debt settlement.
Debt consolidation is typically reserved for homeowners with accrued home equity. Debt settlement involves entering into negotiations with creditors to reduce outstanding balances. Use caution when working with debt settlement companies. They often charge outlandish fees and cannot guarantee results because creditors are not obliged to reduce balances.
Instead of hiring a debt settlor, consider negotiating with creditors on your own. When possible offer lump sum cash payment upfront along with a reasonable payment plan that you can stick with. Creditors will sometimes reduce interest rates or principal amounts when they realize debtors are considering bankruptcy.
BAPCPA requires petitioners to engage in credit counseling, but this can be a good bankruptcy alternative as well. Credit counselors are connected within the industry and can sometimes help negotiate payment plans that allow debtors to avoid filing bankruptcy.
If bankruptcy is the only viable option, debtors must commit to staying current with Chapter 13 payments. Otherwise, they will fail out of bankruptcy and lose court protection against creditors. Worse, debt help options will be limited and debtors prohibited from filing bankruptcy again for 8 years.
Carefully weigh the pros and cons of personal bankruptcy. Spend time researching information and consult with a lawyer to determine if this is the best financial strategy. Remember, this decision can impact your life for up to 10 years, so it's important to choose wisely.