| The Bankruptcy Abuse Prevention and Consumer | | | | Instead of going through this expense and hassle, not |
| Protection Act of 2005 makes it more expensive and | | | | to mention the residual damage to your credit scores, |
| complicated to file for bankruptcy. According to the | | | | why not get a bad credit home equity loan? Bad credit |
| U.S. Trustee Program website, here are some of the | | | | debt consolidation loans can help you keep your house |
| new requirements you must meet to file for | | | | by paying your past due debt, paying off collections |
| bankruptcy:o Your income is now subjected to a | | | | and judgments, and not just preserving credit scores |
| two-part means test to determine whether you can | | | | but actually raising them by lowering your debt ratio. |
| file for chapter 7 bankruptcy or if you must file under | | | | Even with the rates being higher than for those with |
| chapter 13.o Before you can file for bankruptcy, you | | | | good credit, bad credit home equity loan rates are still |
| must complete consumer credit counseling through an | | | | lower than the 18%+ rates of credit cards and way |
| agency approved by the United States Trustee's | | | | better than the nearly 30% rates you'd pay if you've |
| office.o Random audits and targeted audits to | | | | missed a payment on only ONE of your credit cards |
| determine whether a chapter 7 debtor's bankruptcy | | | | or if you've gone over your credit limit. This is called a |
| documents are accurate. If they're not the attorney | | | | universal default rate, a provision more and more |
| could be subject to heavy fines.o Before your debts | | | | creditors are implementing. This year, 45% of banks |
| are discharged, you must attend personal financial | | | | surveyed by Consumer Affairs (CA) said they have |
| management classes at your cost. Only after you | | | | universal default policies - a slight increase from last |
| submit proof to the court that you fulfilled this | | | | year's survey. |
| requirement can you get a bankruptcy discharge | | | | Refinancing debt with a home equity loan will save you |
| wiping out your debts. | | | | the stigma of trying to get a home equity loan after a |
| These are only a few of many requirements added | | | | bankruptcy which is typically worse than getting a bad |
| by the new laws. If that's not enough, a chapter 7 | | | | credit loan. Getting a home equity loan now can set |
| bankruptcy remains on your credit reports for 10 | | | | you up for lower rates for years to come after |
| years. A chapter 13 remains for 7 years AFTER | | | | establishing a positive payment history with your loan |
| you've completed the repayment plan of generally 3 to | | | | and not re-incurring debts. This typically takes about 2 |
| 7 years, which means a chapter 13 bankruptcy could | | | | years, which is a lot less than the 10+ years it would |
| potentially remain on your credit reports even longer | | | | take for a bankruptcy to come of your credit reports. |
| than a chapter 7. | | | | |