|
Know The Truth Behind Bankruptcy Reform
The Bankruptcy Abuse Prevention and Consumer Protection Act goes into effect in October 2005 and seeks to stop the abuse of federal bankruptcy laws, which annually costs all consumers millions of dollars in higher loan rates, higher fees and lower return on deposits.
The majority of consumers who seek bankruptcy, usually because of personal problems such as sudden illness or the loss of a job, genuinely need to file and will be unaffected. Unfortunately, 10% to 13% of those who file abuse the system and use bankruptcy as a financial management tool, racking up debts and then filing bankruptcy to avoid paying them. This legislation establishes a first-ever “means test” that will require those with the ability to pay some or all of their debts to do so.
The new law also includes provisions to ensure child support and alimony payments are protected and, in fact, placed ahead of attorney’s fees, which is not currently the case. Under the new law, domestic support obligations are “first priority” and non-dischargeable, so there can be no disruption of payments to women and children. This is also a change from current law.
Truth-in-Lending principals are expanded to both prohibit credit card companies from using deceptive advertising of “low introductory rates,” and to require that they inform consumers of the financial risks in making only minimum payments. The law requires that a person contemplating bankruptcy receive financial education regarding the long-term consequences that bankruptcy will have to their financial health.
Firstmark Credit Union is committed to safeguarding your finances by helping you make good, sound financial decisions. If you are considering bankruptcy, please call Bankruptcy Specialist Jane Belizaire at (210) 342-8484, ext. 10603. |
