Filing for bankruptcy often is the last option for people who are in financial crisis and want to get back on their feet. A tremendous percentage of people that file for bankruptcy - more than 40 percent - are forced into it as a result of a severe medical condition

For people who don't already have health insurance or a health plan, any catastrophic illness such as a stroke or heart attack, could easily wreck their personal funds. Even for many people with health insurance coverage, the combo of insurance premiums and insurance deductibles, can easily put a significant dent in their financial situation. Especially struck hard include the aging adults plus family units where the single woman is the person in charge of the household. It is frightening to consider just how near many people in this nation are to foreclosure, insolvency, or financial ruin.

Losing a steady job is the 2nd largest reason why many people have to file for bankruptcy. A sudden loss of a job because of company layoffs, company outsourcing, or simply a company going out of business can very easily wreck the financial underpinnings of a family that is already knee deep in debt and basically living from paycheck to paycheck. A divorce can lead to a situation of having to support two households instead of one and also possibly alimony payments.

Regrettably, the new bankruptcy law, which became effective October 2005 was essentially authored by the bank card companies. As you might expect, they modified the law to work in their favor and put in fundamentally no procedures to protect citizens who may have slipped into the above classes.

As a matter of fact, written in the guidelines of the new bankruptcy legislation, the more equity you've got in your home, the more the possibility is that you will need to make use of that collateral to pay off your creditors. This does nothing but increase the odds that you will lose your home through foreclosure. The modifications in the new law also make filing for bankruptcy more expensive. This can make it even harder for the people that really need it to take advantage of it. And lastly, the new law, instead of wiping out some debts that would have been dissolved under the old bankruptcy bill, will force the person into a repayment plan.

Various other service fees also make filing for bankruptcy higher in price. You're going to be required to enroll in budgetary counseling both before and after your bankruptcy filing, which you will have to pay for. The individual bankruptcy regulations are also more complicated, which means that your lawyer service fees will likely be higher.

The prior bankruptcy regulations were based on a belief that a person who was responsible, who had worked his or her complete life, consistently paid his bills on time, and generally was a beneficial citizen, would have a chance to wipe his financial record clean and start over in the off chance that through problems outside of his control, he was unable to pay his bills. Sure, the system was taken advantage of by some, but in a society of laws, that's unavoidable.

Now a number of the old laws were woefully outdated and were long past due for modification. So changes are good. But making changes to the law should never mean that you remove the safety net for people. This is particularly true when the debt position that a lot of of these people found themselves in were almost certainly mad worse by some of the outrageous late fees, percentage hikes, penalties, and other "profit centers" that are part of the financial practices of many of the major credit card companies.