The New Bankruptcy Laws which came into effect from 17th October, 2005, have indeed opened up new possibilities for the debt settlement industry. On one hand, higher cost and more rigid nature of the new laws have put a check on extensive bankruptcy filings. On the other, it has led to a growing interest in debt settlement.
If you file for bankruptcy under Chapter7 of the New Bankruptcy Laws, most of your debts are likely to get redeemed, followed by the liquidation of your assets. While this chapter makes room for complete debt cancellation, Chapter 13 of the new laws gives the debtor a certain time limit within which he/she is supposed to pay off the due. The time span in the latter case may extend up to 5 years.
If your income exceeds the median of the State you belong to, you are considered ineligible for bankruptcy filing under Chapter 7. Instead you are to file it under Chapter 13. This clause makes way for debt repayment plans, of which debt settlement is an efficient mode of repayment. Thus, in a way, bankruptcy is leading to debt settlement!
Even the IRS interference in the debtor