It’s easy to spend too much money on credit cards at any time of the year, but it can be particularly difficult to stick to a budget during the holiday season. If you have seriously overextended your credit and have more debt than you can handle, then you have several options, including credit counseling and debt consolidation. The most serious step you can take is filing for bankruptcy.
If you are considering filing for bankruptcy, then you need to know that a new bankruptcy law, the Bankruptcy Abuse Prevention and Consumer Protection Act, came into effect on October 17, 2005. Under the new law, you must get credit counseling from a government-approved organization within six months before you file for bankruptcy protection. (You can find a list of these organizations at www.usdoj.gov/ust). The law implements a new “means test” to determine whether a debtor is eligible to file for bankruptcy under chapter 7 (under which all non-exempt assets are sold and most unsecured debts are discharged), or must file under chapter 13 (under which a portion of unsecured debts must be repaid from wages over three to five years).
Now that the new bankruptcy law is in effect, it is more important than ever to seek legal advice early if you are concerned about your debt burden.