In April 2005, Congress made sweeping changes in U.S. bankruptcy law, which shall enter into force, 17 October 2005. It is called the  Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and is a major problem for Americans struggling with debt problems.

What is the effect of bankruptcy law have on the practice of debt settlement and debt () trial? The creditors are prepared to look to consumers to avoid bankruptcy to negotiate? Is that lump sum settlements of 30%, 40%, 50% is still possible now that this new law was passed heavy?
The answer is  YES . It is business as usual  in the collection industry. Customers opt bankruptcy will definitely be affected for the worse, as I describe it is below, but those who lose to negotiate their way out of debt is very little difference choose to see. creditors are still negotiable. The bids will be forever. And nothing will change much in the world of collections. In fact, a viable alternative to bankruptcy is more necessary than ever.

The banks have received on credit cards at millions of dollars lobbying this bill. They have been working for over a decade. Now celebrating. These are people who think the bankruptcy system by wealthy individuals, creditors, if they could pay their debts have been deceived abused.

1. In the period from 1995 to 2004, the bankruptcy filings doubled, while during the same period, the sector has tripled profits from credit cards.

2. On the credit card companies are not responsible for their objective of  easy credit  to people who could not pay the loans, which helped the wave of bankruptcies in the last ten years.

3. For over 60 years, 85% of bankruptcies by medical bills or job loss is caused.

4. A divorced woman is 300% higher risk for a married woman file.

5. To explain Owner-Hispanic African American and are 500% more likely than non-Hispanic white owners of bankruptcy.

6. About half of bankruptcies due to medical expenses due to the lack of health insurance or inadequate coverage leading to uncovered expenses.

The new law was a gift to banks, credit card companies, pure and simple. By some estimates there will be more funding 5 million U.S. dollars in the industry. In other words, the project is on profits and not much else.

Since my whole approach is to avert bankruptcy, I will not go into a detailed analysis of the provisions of the new law. But to summarize, the net effect is that many (if not most) human arrangement, which is under Chapter 7 bankruptcy forced to submit to the version of Chapter 13. In plain English, this means that most taxpayers will be forced to be a part of the debt of more than 5 Pay-year program established by the court.

One of the worst aspects of the new law is to determine the use of IRS  allowable  cost list of your monthly budget. In other words, the costs of daily life thrown out the window in favor of the IRS rules (and we all know how generous the IRS can be!). So if your actual income say $ 1,300 per month, and the IRS, it should be $ 1045 for your community and state, this is hard! The court shall order the period of 1045 $.

In short, people who try to bankruptcy after the 17th October 2005 file in a very rude awakening! Goodbye cell phones, cable TV, high-speed Internet access, movies, dinner with the family, and certainly nothing beyond the minimum requirements, such as deductions by the IRS and the courts.

So what makes me so sure that the banks will be eager to give than ever with consumers for 50 cents or less?
Easy. The words: Stealth Bankruptcy.

Hundreds of thousands of Americans will discover the new reality of this tough law, and provide justice to subscribe bankruptcy, instead of what I call  stealth bankruptcy.  A stealth bankruptcy is when you (without an address change to move), you would your phone number, and let the radar screen to live in an all-cash, not credit cards. Many people have already been down this path to choose instead of being against the invasion of life that goes with formal bankruptcy. Under the new law comes into force, more people than ever will benefit from this approach.

A. The creditor does not know where you are still eligible for Chapter 7 or Chapter 13 bankruptcy. Remains the risk that you qualify for Chapter 7 and end on the discharge of his debt in full, so they get nothing.

B. Even if you file Chapter 13, the new guidelines, the creditor will receive only 30-50% debt to income (and even less in some cases).

C. In Chapter 13, it will take 3-5 years to recover only 30-50% of the creditors.

D. A lump sum of 30-50% is collected now much better than the same amount over 3-5 years.

Of course, I certainly expect debt collectors use the new law to harass and people who are intimidated to know their rights and understand. You can expect to say things like:  You can not file bankruptcy under the new law, so you better pay up today!  It is intimidating and threatening, as always, but at the end of the day, she continues to accept a reasonable settlement. After 17 October 2005, will always be  business as usual  in the world of debt collections.