What is the National Debt Relief Program Act?

Below is a summary of the National Debt Relief Program Act:

  • Within six months before filing, you must take an approved financial management course.
  • If your current monthly income is less than the median income in your state of residence, you may file for Chapter 7 debt elimination of all of your consumer debt. You may not include tax debt, or government-backed student loans.
  • If your current monthly income is more than the median income in your state of residence, you must apply a means test:

Means Test

Step 1: Your monthly income – your monthly expenses = A

Step 2: A x 60 = B

Step 3: If B of step 2 is >$10,000, or >25% of your debt, then are eligible to file under Chapter 13 for debt reorganization

If B of step 2 is <$6,000, or <25% of your debt, then you are eligible to file under Chapter 7 for consumer debt elimination

Should I use a credit counseling agency before filing for bankruptcy?

As an experiecned bankruptcy attorney, I can explain to you how debt management and credit counseling services operate and help you determine if they are right for you.

You should be aware that the credit counseling industry is under national scrutiny for deceptive advertising and charging excessive fees. In many cases, people who want to avoid bankruptcy may sign up for a debt repayment plan at the credit counseling office, only to find themselves scrambling to pay the associated fees, on top of a burdensome debt load. I urge my clients to listen carefully, ask many questions, and think about the financial implications of signing on to a debt repayment plan during a required credit counseling session.

How do I begin to rebuild my credit after bankruptcy?

Ways to Rebuild Credit After Bankruptcy

  • Don’t believe the bankruptcy myths the credit industry wants you to believe.
  • When you file, exempt your home and car so you have some debt to repay
  • Open a credit union account, take out a small loan after a year, repay on time
  • Open a secured credit card account, repay on time
  • Don’t apply for credit cards for which you’ll be denied. Denied credit goes onto your report.
  • Include a statement explaining your bankruptcy with credit applications.
  • Remember the lessons learned during the required credit counseling session.

How To Determine If Filing For Bankruptcy Is Best For You

The thought of filing for bankruptcy can be scary and stressful if you don’t have the right information. You should realize that Millions of Americans have started a new life by filing bankruptcy. Most likely several of your friends, neighbors, and co-workers have already filed bankruptcy and are on their way to financial recovery.

Below are a few questions you should ask yourself to determine if bankruptcy is an appropriate course of action.
  • Are you paying more than 25% of your family take-home pay to creditors?
  • Are you juggling credit payments and accumulating late fees by not paying?
  • Have you opened a new credit card account to pay off a higher-interest old one?
  • Have you taken a credit card cash advance to pay bills?
  • Are you making minimum monthly payments on more than one credit card?
  • Have you put off paying bills because of an unexpected expense?
  • Are you still paying for holiday gifts purchased more than one year ago?
  • Have you refinanced your house in order to “catch up” on your credit bills?
  • Are you arguing more about money than you did a year ago?