The new bankruptcy laws will be in effect before the end of the year. This is devastating news to those who are already in debt or facing possible future debt. However this is good news to most businesses no longer having the need to file for as much profit loss as some had to in the past. Once the new bankruptcy law goes into effect it will be almost impossible for some individuals to file for bankruptcy. Chapter 13 bankruptcy will be the most likely step anyone can take to file at all.

What is Chapter 13 bankruptcy? It is an option that is given to those who have any kind of steady income. Basically, anyone who has a job. It is a payment plan and not a way to wipe a way your debt. Which means the days of wiping the slate clean are over. However Chapter 13 does protect your assets. The court devises a payment plan in which you are to pay to a trustee that is appointed by the court. Usually the payments are to be paid off in three years time. There are some exceptions, but that is up to the courts to decide. So now that the bankruptcy law is changing what are some things people should do to avoid debt?

There are circumstances that most individuals do not account for when they invest into a home or use credit cards for purchases. One significant cause to debt is suffering some kind of financial loss such as losing a job or investments such as stocks. When this kind of situation occurs people are not equipment to pay their monthly payments such as mortgages leases and credit card bills. A wise thing to do is to be prepared for the unexpected. Save some money off to the side. Keep it in a separate account in case something that was to happen in the future that effects your income. Establishing any kind of financial plan is always a good move to avoid bankruptcy.

A major cause to the change in the bankruptcy laws is do to some people abusing their credit cards and then filing to erase their mistake. Also some people have made the same mistake and have filed more then once. There are a lot of people that find this decision unfair.

Unfortunately we can not change the decision that was made by our federal government. Those who did nothing wrong to fall into debt will have to pay the same price for those who have abused the system. All we can do as a whole is carefully plan our financial needs and have a back up plan to avoid falling into debt. Eliminate the need to ever have to file for bankruptcy.

Kevin Heaps is the webmaster and owner of Aol Bankruptcy which is an excellent place to find bankruptcy links, resources and articles.