Bankruptcy Reader

By Priya Jestin, Staff Writer

It’s been around a year since the new bankruptcy law came into force and yet, there are many people who are still unaware of the intricacies of the new law. Most of them still think that bankruptcy is an open and shut case and will not involve much effort. Stuck in a classic debt trap — just file for bankruptcy! Sorry to disappoint you guys, but the party’s over.

Things have gotten so tough, you’d be better off repaying your loans than trying the bankruptcy route. That’s if you are still in a position to pay off your debts. While a Chapter 7 filing can help you get rid of your debts, you must check if your income is amenable to a Chapter 7. By that I mean, if your income exceeds the limit set for your state you may not be eligible for a Chapter 7 . Even in a Chapter 7, some bills are not discharged, such as taxes, student loans and back child support.

If you cannot file a Chapter 7, you could try a Chapter 13 wherein you would have to pay back some portion of the loans. This could mean living on a strict budget, set by the court, for a period of three to five years. Oh, and before I forget, a bankruptcy can remain on your credit report for up to 10 years. This could exacerbate problems and make it difficult for you to get a job, insurance, or reasonably priced loans.