The Effects of The Bankruptcy Law on Filings

2006-08-29

Back to Part 1 of The Effects of The Bankruptcy Law on Filings

Some have said that the number of bankruptcy filings have slowed down in the last few months, but this may be a contradiction of statistics that are given by other companies. Some lawyers may be hesistant of entering petitions until they fully understand what the new law entails. There are a number of advantages and disadvantages to this law, and how you benefit from it is dependent on which side of the equation you're on. For the banks and credit card companies, this law is excellent. It will insure that a larger percentage of their customers are forced to pay back the money they owe, because they will have a harder time filing for bankruptcy.

In this end, this means more profits for the financial institutions. This law is not so good for the typical consumer. A number of studies have shown that the average American owes about $10,000 in credit card debt, which is a sizeable percentage of their annual income. Under the new law, they will not be able to file bankruptcy in order to get out of paying this money back. They would be forced to set up a payment plan and use the services of a credit counselor. It should also be noted that this new law has led to profitable market for companies who offer credit counseling services.

While some credit counseling services may be free, others may cost the consumer money. A new law that requires consumers to use these services will increase the profits of the industry. In the end, no matter whether the new law has increased or decreased the number of filing, it is important for consumers to be responsible when it comes to managing their personal finances. While credit card companies merely offer the credit cards, it is the responsibility of the consumer to use discernment when handling them. The debt statistics of Americans are quite alarming. The savings rate is low, and the debt rate is high. It is important for people to begin paying attention to how they handle their finances, because it has only become more difficult for people to use bankruptcy as a method of getting out of debt.

Many people are using credit cards improperly, and this is the problem. While many people are quick to blame the banking institution, these companies don't keep secrets when it comes to the interest and penalties they will charge. It is important for consumers to be as informed as they can be.

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