If you are a product of the 70's or earlier, chances are high that you don't believe in filing for bankruptcy, regardless the financial situation you are in. A friend of mine who started his own business a few years ago is now struggling to keep afloat as debts pile up around him. Despite the advise of friends and family, he refuses to file for bankruptcy, stating he is too proud and wants to avoid the humiliation he feels he would experienced if he declares bankruptcy.

I can understand. We are both the same age, in our late 50's and a product of the 1950's. We both grew up poor and enjoyed financial success after graduating from college. While growing up in rural areas, we were both taught that a real man never gives up and never declares bankruptcy, for to declare bankruptcy is to admit failure. More importantly to people like us who grew up in small towns, we were also told by our folks that when people declare bankruptcy it is published in the local legal news and newspapers, bringing shame to one's entire family.

My father has struggled with financial problems all his life. I know of at least 3 occasions when he should have declared bankruptcy. But no matter how bad things got, he somehow managed to tough it out and is a proud man for it. The price, however, has been enormous. He and my Mom have lived behind the 8-ball all their lives, with every pay check being already spent before it arrived, needed to pay minimum balances on credit cards and loans that had enormous rates.

On at least 3 occasions I've tried to bail them out. They are proud folks and hate accepting money from their son. But each time I pay off bills for them, they only create new bills. In their late 70's now, life has reversed itself and they have become my children every bit as much as my own children, needing me to help them in many ways.

If you are considering bankruptcy as a means of solving your financial problems, you should be aware that a new bankruptcy law was passed in 2005 that makes it much more difficult for U.S. citizens to apply for bankruptcy.

All debtors will now need to get credit counseling before they can file for bankruptcy. They must also receive additional credit counseling on debt management and budgeting before their debts can be erased. Some filers with high incomes will no longer be allowed to use Chapter 7, but instead will have to pay at least part of their debt under Chapter 13.

The new bankruptcy law also imposes new requirements on lawyers, making it more difficult to find an attorney to handle a bankruptcy case (or so lawmakers claim). I'll believe the latter when I see it.

After your bankruptcy case is completed, you will be required to undergo more counseling, learning personal financial management. Only after you can demonstrate to the court that you have completed all counseling requirements can you receive a bankruptcy discharge wiping out your debts.

The net result of the new law is that filing for bankruptcy is no longer an easy matter. If you were not among the tens of thousands who filed before the new law recently came into effect, you may have waited too long. If you're from the old school like my friend and my parents, you may not really care. But those who truly understood the virtues of the old bankruptcy law and the ease of starting life anew with a clean financial slate, would likely tell you that you've missed a golden opportunity.

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