Bankruptcy Attorney Colorado Springs

Bankruptcy Attorneys Colorado Springs

Bankruptcy Overview

The word "bankrupt" means being unable to pay your bills as they come due. Today, our economy is based more on consumer debt than at any other time in our country's history. In this age of easy credit and seemingly constant encouragement to buy, consume and charge, it is not surprising that so many people are drowning in debt. This debt is insurmountable for many people and causes stress, family problems and feelings of hopelessness. Many times this debt is caused by the loss of a job or a sudden medical problem, but often it is simply poor planning.

If this is a temporary situation, it may not require legal help. Often alternative solutions such as working out special payment plans with your creditors or contacting a credit counseling agency can avoid the need for bankruptcy. Filing for bankruptcy usually is, and should be, the last resort when no other solution to your financial difficulties exists. Congress recognized that responsible, well-intentioned people could, from time to time, run into serious financial problems. Allowing citizens to recover from an overwhelming burden of debt, to start fresh and to look to the future, creates more productive members of society --- which is good for society as a whole.

For the average consumer, there are two basic types of bankruptcy: The Chapter 7 liquidation (also known as "fresh start" or "straight" bankruptcy) and the Chapter 13 reorganization (also known as "consolidation"). Each individual's situation and preferences determine which is appropriate.

New Bankruptcy Law

Strict means test - According to the American Bankruptcy Institute, more than 70 percent of Americans who file for bankruptcy do so now under Chapter 7 of the U.S. Bankruptcy Code. Chapter 7 allows individuals to cancel outstanding unsecured debt, such as credit card and medical bills. But under the new law, most households earning more than their state’s median income will have to file under Chapter 13, which requires a plan to pay off at least some of the outstanding debt. The court will apply a strict means test to determine who is eligible to file under Chapter 7. Now, individuals filing for bankruptcy must document income with pay stubs and tax returns. Creditors will be able to review these items and can challenge any discrepancies in court.

Revised debt payment plans - Individuals filing a debt payment plan under Chapter 13 of the Bankruptcy Code will see changes including: The time period required to make payments on pre-existing debt will grow from three years to five. This means households will have to pay back a greater percentage of what they owe.

Debtors will have to repay the full amount of loans on cars purchased within the 30 months immediately prior to filing for bankruptcy. In the past, the court could lower those payments and the interest rate.

No one will be allowed to file a Chapter 13 petition more than once every two years where the first one resulted in a discharge. Previously, there was no limit on how often an individual could file a Chaper 13.

Mandatory debt counseling - The new law requires debtors to receive credit counseling at their own expense within six months before filing. The goal is to encourage consumers to pay back debts rather than simply walk away. Consumers with little resources to repay loans will be encouraged to file for bankruptcy, but others will be challenged to create repayment plans to extinguish outstanding debts. The new law also requires consumers to take a financial-management course after filing for bankruptcy.

Higher minimum credit card payments - Federal banking regulators have pushed credit card issuers to raise their minimum monthly payment by the beginning of 2006. Credit card companies will have to collect a "reasonable" amount of principal each month, which is typically thought to be at least one percent of the outstanding balance. Currently, about 11 percent of all cardholders pay only the minimum amount required by the card issuer each month. Although it means higher monthly payments, consumers will pay off their debt much quicker, thus paying less interest, but at the same time, it adds more stress to an already tight household budget .

Dewayne Gooch, P.C. has the experience and knowledge to offer clients superior bankruptcy representation. We are up to date on the new bankruptcy laws enacted nearly three years ago, and we know how to apply it to your bankruptcy case in the most advantageous way possible.

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Bankruptcy Lawyers Colorado Springs

Contact Dewayne Gooch, P.C. to help you find the solutions to your problems. We have over 15 years experience in bankruptcy law, and can help solve your bankruptcy case.

Learn more about our Bankruptcy Attorney Colorado Springs services

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Call 719-636-0001 today to speak with our bankruptcy attorney.

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