Bankruptcy Laws - Which Types of Bankruptcy Are Now Harder to File?

Bankruptcy is a debt relief method for debtors who are not in the position to pay off their creditors. The debtors opt for mainly two types of bankruptcy - chapter 7 and chapter 13. Under chapter 7, the assets of a debtor are auctioned in order to raise funds. This fund is then used to pay off creditors who had lent money to the debtor. The loans which cannot be repaid through this method are then written off by the court. This allows a debtor to make a fresh financial start. Most debtors who want to file for bankruptcy are aiming for bankruptcy under chapter 7.

Bankruptcy under chapter 13 is a court ordered repayment plan. A debtor has to repay his unsecured debts under a new repayment scheme. This mainly involves registering with a credit counselling and working out a way to pay off the loan amount.

Many debtors were using bankruptcy as a means to get out of their debts. In order to stop this abuse and protect both the debtor as well as the creditors from the after effects of bankruptcy the bankruptcy laws have been made more stringent.

If the debtor's income is more than the median income of his state then he has to take a means test in order to qualify for bankruptcy under chapter 7. This test takes into account the income of the individual and debt condition and check if after meeting the basic expenses for a decent lifestyle the income is sufficient to pay off the debts. Only if a person passes this test can he file for chapter 7 bankruptcy.

The process of filing for bankruptcy has become so tedious that people are looking for other debt relief methods to solve their debt problems.

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Debt settlement is a legitimate alternative to filing bankruptcy. If consumers are experiencing a financial hardship and have at least $10k in unsecured debt then debt settlement can be a legitimate way to eliminate up to 70% of that balance.

Check out the following link to get a free consultation from a debt relief specialist in your area:

Free Debt Consultation [http://www.freedebtsettlementadvice.com]

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