The new bankruptcy laws require petitioners to obtain credit counseling through an agency approved by the U.S. Trustee. The Bankruptcy Abuse Prevention and Consumer Protection Act were enacted in 2005 to put an end to bankruptcy petitions filed by consumers who engage in frivolous spending. Under BAPCPA, debtors are now required to repay a portion of debts by establishing a Chapter 13 payment plan.

Petitioners must enter into credit counseling no more than six months prior to filing bankruptcy. Once credit counseling is completed, debtors receive a certificate which is presented to the judge. Petitioners cannot obtain bankruptcy approval until the credit counseling requirement is successfully attained.

Financial experts suggest debtors obtain credit counseling through a Trustee program provider even if they don't plan on filing personal bankruptcy. If debtors need to file for bankruptcy at a later date they will have met the credit counseling requirements set forth in BAPCPA. Oftentimes, consumers who obtain credit counseling can eliminate the need to file for bankruptcy altogether.

Consumer credit counseling services can be beneficial to individuals struggling to make ends meet. Many people experience financial problems because they do not know how to manage personal finances. In addition to helping consumers better manage their debt load, consumer counseling agencies can help debtors negotiate with creditors to lower monthly payments, reduce interest rates, and eliminate late fees and penalties.

Credit counseling agencies are located in most major cities. Agencies charge a fee for services rendered. Individuals who cannot afford counseling should seek out non-profit credit counseling agencies that offer reduced or no-cost services. Non-profit credit counselors utilize a sliding scale to determine fees based on income.

Current economics have left millions of Americans unemployed and facing foreclosure. When homeowners face losing their home they often turn to bankruptcy to stop foreclosure and end creditor harassment.

Entering into bankruptcy should be a last resort. However, if no other option can provide adequate debt relief, bankruptcy might be the best choice. Debtors should consult with a bankruptcy lawyer and understand the ramifications associated with bankruptcy.

It is important to understand that bankruptcy remains on credit report for ten years and can prevent consumers from obtaining any type of credit for several years. Under BAPCPA, consumers are usually required to file under Chapter 13 and devise a repayment plan.

Chapter 13 payments usually extend for two or more years. Debtors must contribute a large portion of disposable income toward repayment of debt and are not allowed to incur new debt without court approval.

When debtors are unable to adhere to Chapter 13 payment plans they will fail out of bankruptcy and lose protection from the court. When debtors do not submit payments to the bankruptcy Trustee, creditors can petition the court seeking bankruptcy dismissal. If this occurs, creditors can commence with collection actions including foreclosure.

Regaining control over personal finance is rewarding and empowering. Multiple options exist for consumers who truly want to get out of debt. Consumers who take time to become educated about credit repair options and learn money management strategies can overcome financial challenges and begin investing for their future.