It’s A New World For Debtors In Bankruptcy

Posted By on November 25, 2010

A re-designed bankruptcy law was the end result of a huge successful lobbying effort by the banks back in 2005. 

Congress hadn’t envisioned a surge in bankruptcies when it re-designed the bankruptcy law to make it harder for consumers to walk away from their debts. Americans are expected to file for bankruptcy-court protection this year at a rate of more then 1.6 million and this is more than any year since Congress overhauled the system in 2005. 

But the face of a bankruptcy has changed during this recession, and we now see better-off Americans included along with those of the poorer in filings.  While most debtors usually earn less than $30,000 and don’t have a college degree, last year more than a fifth of them actually did have a college degree. Beware though….. a bankruptcy can bring relief from bill collectors’s calls and exploding credit-card balances, but the downside is that a bankruptcy petition will stay on a credit report for up to 10 years.   Then also there is trying to adjust to living in a world without a credit card, and understanding that new credit opportunities will be few and far between.

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