Last year, a federal law cracked down on bankruptcy filing. Despite the new, harder rules, it is still possible to file bankruptcy to get out from under debt.

The new rules require extra steps before filing, but most Americans can meet those requirements. The toughest rule is that consumers must first undergo credit counseling before seeking bankruptcy-court protection.

Actually, the credit counseling requirement can be a helpful tool in identifying bankruptcy requirements and preventing a future recurrence.

One reason bankruptcy filing is lower this year than last, is because a rush of people filed bankruptcy before the new law went into affect, but personal bankruptcy is now rising again. Filings in the second quarter rose to 34 percent over the first quarter, according to AACER, a bankruptcy-court data company.

The new law tightened income limits, raised filing fees and made the entire process more complicated, so many consumers simply hired an attorney to help with the process and meet requirements, such as proof of credit counseling.

If; for example, a consumer files bankruptcy and is denied because he/she did not first undergo credit counseling, when that consumer re-files after the counseling he/she will have less protection from creditors. Hence it is important for consumers to first undergo credit counseling before filing bankruptcy.


Tips before filing bankruptcy:

You must consult with a credit counseling approved by the U.S. Trustee Program for your state judicial district.

You must prove you attended credit counseling. Within 24 hours, an approved agency must provide you with a certificate as proof of your counseling session.


Cost:

In general, the charge for a pre-bankruptcy counseling service is $50. If you can't afford it, you can request a fee waiver. But you must make that request before the session begins. Likewise, the counseling organization must discuss any fees before starting the session.


Other Info:

Credit counselors can only advise about different options. Though counseling was intended to help people look at alternatives, most debtors choose Chapter 7 bankruptcy. A credit counselor should not push you to opt for a debt repayment plan, nor bankruptcy. A qualified counselor will explain your options, the affects of each, and allow you to decide which path is right for you.

Free Bankruptcy Forms: If you want to file bankruptcy, you can download free bankruptcy forms at Credit Federal.