The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made major changes to the bankruptcy laws. Before a debtor is able to move forward with a bankruptcy filing, they will need specific certification from a credit counseling agency. The new law also includes a "means-test" to determine who will be able to file and who won’t be able to file.

No matter what type of bankruptcy you decide to file, there are certain rights that will be granted to the filer. There is an automatic stay that requires all creditors to cease collection attempts, and makes post-petition debt collection null and void. This means your creditor can not try to collect on your debts unless they go through the bankruptcy court system. There are exceptions, of course, but generally the automatic stay offered in bankruptcy acts as a “relief” to debtors from collection proceedings. Also, as a general rule, secured creditors who have a security interest, or collateral interest, in the debtor's property, will be paid before unsecured creditors will be paid. Each priority level must be paid in full before the next priority level can receive payments.

There are usually long term costs associated with a bankruptcy, and therefore, we only recommend filing for bankruptcy as an absolute last resort. If you file bankruptcy, you can not file bankruptcy again for 8 years. A bankruptcy will remain on your credit record for 7-10 years and will affect your ability to get a loan or be approved for credit. Even after a bankruptcy has been removed from your record, you will still be required to disclose it on many forms and applications. Though it is the cheapest option, there are many long term costs associated with a bankruptcy, which is why we only recommend it as a last resort for anyone struggling with debt.

While there are many types of bankruptcy associated with consumer debt, the three most common types that we deal with are as follows:

• Chapter 7 Bankruptcy
• Chapter 11 Bankruptcy
• Chapter 13 Bankruptcy

At S.J. Packman & Associates, before we make any recommendations, our attorneys, certified debt specialists, and paralegals, are trained to ask the right questions to find out about your specific situation. Based on your current income and your financial hardship, we will determine which course of action will work best for you. We do not only offer one path, as there is no one process that can solve everyone’s needs. We will take our time with you and help evaluate what your best course of action should be. Call now and one of our advisors will be there to get you started on your path to financial freedom. There is no obligation to enroll, so don’t delay.

This website does not provide legal advice that should be relief on, consult an attorney licensed in your jurisdiction for specific, personalized advice.