Sunday, October 08, 2006

New Bankruptcy Law Update

A new CNN/Money article asserts that the new bankruptcy law isn't having as negative an effect on debtors as consumer groups had feared it would.

While this should come as a bit of a relief to those with large amounts of credit card debt, the trouble seems to be not the reality, but rather consumers' perception of reality.

In other words, many consumers who are aware of the new law seem to think that it has limited access to bankruptcy and that they will in fact have to repay their credit card bills, whether they file for bankruptcy or not. This makes them more susceptible to the manipulations of collection agencies, who may take advantage of this perception to force consumers to agree to less than reasonable repayment plans, etc.

In reality, people are actually having to repay less of their credit card debts under the new law. It is important that consumers be aware of this, as the threat of bankruptcy can be an important bargaining tool when negotiating with creditors.


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