New credit card bankruptcy law came into force in 2010 to make it more difficult to remove certain types of debt through the bankruptcy process, especially with middle and high income. But in some cases, they also help consumers to repay their debts faster, saving on interest payments. New 2010 credit card bankruptcy law is designed to give consumers incentives to manage their debt prudently and punish violations of the bankruptcy system before.
According to the American Institute of bankruptcy more than 70 percent of Americans who declare bankruptcy do so now, under Chapter 7 of the bankruptcy code allows individuals to cancel debts unsecured outstanding issues such as credit card and medical costs. But under the new l credit card bankruptcy law, the majority of households earn more than their average income of the state will be forced to file under Chapter 13, which requires a plan to pay at least part of the debt. Court applies a strict means test to determine who is entitled to file under Chapter 7.
People who file a plan of debt repayment under Chapter 13 of the Bankruptcy Code will change the period required to make payments on existing debt will increase from three to five years. This means that households will pay more interest under this new credit card bankruptcy law.
Federal Banking Regulators push issuers of credit cards to increase their minimum monthly payment at the beginning of 2006. Issuers of credit cards should collect reasonable amount of principal every month, which is generally regarded as at least one percent of the outstanding balance. Currently, about 11 percent of all holders pay only the minimum amount required by the card issuer each month. Although this means higher monthly payments, consumers will soon pay its debts, thus paying less interest.
Under the new 2010 credit card bankruptcy law, the fee to hire bankruptcy attorney is likely to rise, the lawyers have to sift through the tax return and pay the invoice for the verification of income. If they do not have substantial amounts of income or assets, the lawyers may be punished.