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Bankruptcy laws toughen up; consumers seek bankruptcy classes and credit counseling

Declaring bankruptcy is not a frivolous action. This financial decision will stay on your consumer credit report for years, destroying your chances of eligibility for college, car, or mortgage loans. This decision can even affect employment: some jobs — especially those involving money or sensitive financial information — require good credit scores as a condition of employment. You must consider what you stand to lose before declaring bankruptcy.

In 2005, the United States Congress passed a reform act that tightened the requirements for declaring bankruptcy. The legislation is called The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. As a result of this legislation, consumers must attend credit counseling sessions and show certificates of class or credit counseling completion before they can declare.

CNNMoney.com reported in Apr. 2005 that a primary reason this legislation was created is because Americans are abusing the system. Previously, some individuals were able to declare Chapter 7 bankruptcy – a declaration that allows your debts to be liquidated and forgiven – in situations when they would have been able to re-pay their debts under a debt management plan. The CNN article also argued that stricter laws will be a boon for credit companies, who will amass profits from payments made on credit cards. (After the law was passed, consumers are more likely to need to file for Chapter 13 bankruptcy, which involves debt repayment instead of total debt liquidation.)

To qualify for Chapter 7 bankruptcy under the new law, you must be able to prove that you cannot afford to pay 25 percent of your unsecured debt. Many people who are considering filing for bankruptcy can afford to make these payments, so they will need to file a Chapter 13. More importantly, any consumer who wishes to declare bankruptcy must complete some kind of credit counseling program, such as bankruptcy classes.

Advantage CCS offers bankruptcy classes and bankruptcy counseling sessions, both in-house and online. You and your counselor will discuss credit, debt management, your specific debts, and how you have attempted to manage those debts so far. Upon completing a bankruptcy class, you will be issued a certificate of completion. This certificate proves that you understand what declaring bankruptcy involves. In accordance with the new bankruptcy act, you may only declare if you have a certificate of completion. If you feel that you can benefit from Advantage CCS services, please sign up as soon as possible.

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