If you’re in debt, you probably know you’re not alone. In today’s tough economy, millions of consumers owe money, and as a result, there are many different debt options to help them recover. The trick is to find the option that works best for you, and the truth is, there’s no clear winner. While an approach such as debt settlement might work for some, credit counseling might work better for others. It all depends on each one’s particular case.

Filing bankruptcy is another alternative to getting a “fresh start”, but due to the New Bankruptcy Law, going bankrupt has become more complex and expensive than ever before. The new law that went into effect in 2005 added new requirements and regulations that have made the process of filing bankruptcy more complicated.

Less Consumers Will Be Given A “Fresh Start”

According to the new law, consumers with an income higher than the median for their State won’t be allowed to file under Chapter 7 and see most of their debts cancelled. Instead, they’ll need to file under Chapter 13 and commit to a repayment plan. This repayment plan could last up to five years.

More Consumers Will Have To Live With Less

While under the old law the court decided what were basic living expenses in order to calculate a debtor’s disposable income, under the New Bankruptcy Law, the IRS will make this decision for all debtors whose income is higher than the median for their state. Doesn’t seem like a big deal, does it? The problem is that actual living costs are generally higher than the allowed expenses established by the IRS.  This means many debtors will have to live on less money since, for instance, internet, cable, and eating out might not be regarded by the IRS as basic needs.

Consumers Will Need To Spend More Of Their Time and Money

Under the new law, consumers will need to take Credit Counseling and money management classes within the six months before filing. Needless to say, they must pay for these services. Moreover, Bankruptcy Attorney fees are higher than what they used to be. Why? Simple: the new law requires a Lawyer to vouch for the precision of his client’s paperwork. Any inaccuracies could mean he’ll be fined. Thus, there’s more liability involved in each bankruptcy case, and with more liability comes more time devoted to each client and, as a direct consequence, higher fees.

Is Filing Bankruptcy Your Best Option To Getting Out of Debt?

Sometimes it’s just the last resort. Keep in mind there are other debt options to fix your finances. Approaches such as debt settlement and credit counseling have proven to be effective in many cases. However, sometimes a consumer is so deeply in debt bankruptcy truly is the only option he has.

Because every case is different, I advise you to keep researching about your different financial options. If bankruptcy is a path you’re seriously considering taking, contact a Bankruptcy Lawyer to examine your case in detail. Don’t jump into any decision yet. Take the time to analyze your situation and the results of choosing one financial alternative over another.