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Americans Race to Bankruptcy |
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The following is an adaptation of an article appearing in www.telegraph.co.uk on 29th August 2005.
The number of Americans filing for bankruptcy is soaring, as debtors seek to beat the deadline for the introduction of tougher laws making it more difficult to write off personal debts.
In the three months to the end of June, more than 467,000 bankruptcy filings were received by US courts, up 66,000 from the previous period and the highest reading since comparable records began in 1995.
The rise comes after bankruptcy filings had been leveling off and even began to decline slightly last year.
The new law was signed by President Bush in April but most of the provisions come into force in October. The revisions change who can and cannot file for different types of bankruptcy.
Debtors who earn more than the median income in their state and who can repay at least $6,000 of their debt over five years will no longer be able to have their debts wiped out under the generous provisions of Chapter 7 of the bankruptcy code which protects people´s homes and allows them to make a fresh start.
With the new legislation they will have to seek protection under Chapter 13, which requires them to draw up strict repayment schedules and which has been criticised for making it impossible for many to shake the burden of debt.
Economists say bankruptcy has become a get-out clause for people who have let debt get out of control. Last year, household debt hit a record high relative to disposable incomes, while the savings rate has fallen dramatically.
For this and other news items please visit www.debtscotland.com . By registering on the site you will find a host of debt recovery and credit control tools in the free credit resources section.
Stephen Cowan
Yuill & Kyle, debt recovery & credit control lawyers, Scotland
79 West Regent Street, Glasgow G2 2AR
scowan@yuill-kyle.co.uk
Direct Dial: 0141-572-4251
www.debtscotland.com
www.ykcreditcheck.co.uk
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