A bankruptcy ? though never pleasant ? to many was a fresh start. Permitting those who got in over their heads, who may have managed finances unwisely, or who encountered sudden fiscal upsets to have a majority of their old debt eradicated and thus start anew on the road to good credit and the responsible management of funds. Yet after October of 2005 and blaming the courts, bankruptcy bound debtors found discharges heavily burdensome and instead of rejoicing at the newfound freedom and ability to once again start over, old debts were said to haunt those in dire financial straits.

While some of the changes were common sense changes for the better of the system, the limitation on the homestead exemption and the means test that would be a litmus test as to whether a family truly needed bankruptcy protection or just unload some assets ? frequently at horrendous losses ? were two of the most commonly cited reasons for a decline in filings. At the same time, the mandatory credit counseling before the bankruptcy filing was received as a self-serving move on behalf of the credit card industry that is heavily invested with the counseling agencies.

For this reason, though the number of bankruptcy filings have sharply declined, the number of Americans with bad credit and no hope for help in sight has just as sharply risen. In the same vein, a failure to provide quick and decisive discharge action has cost many families precious years of being mired in fiscal muck rather than having a fresh start that would eventually permit them to support their grown children's higher education. Even if there is very little that can be accomplished by blaming the courts, bankruptcy laws have not changed for the better.

When anyone files for bankruptcy, the proceedings will go through their local federal bankruptcy court as the entire process is governed by federal law. There are a few aspects of the bankruptcy proceeding that may be influenced by state laws, the overall rules and procedures covering the process is under federal jurisdiction.

Whether an individual filing for personal bankruptcy or a company or corporation filing for protection under bankruptcy all of the proceedings are handled in federal bankruptcy court. This is more beneficial to the debtors as some of their creditors may be from other parts of the country and not influenced by decisions of state courts. With all decisions coming at the federal level, it covers the individual or company regardless of the location of the creditors.

Additionally, many creditors are less likely to attempt illegal collection tactics sometimes used when a person initially files for bankruptcy, as they fear facing charges on the federal level. There can also be no misunderstanding of the rules if they would be different in other states. Creditors may make a case speaking to the court's trustee about the discharge of debt, but in the majority of bankruptcies, there are few times then holders of unsecured loans will appear in federal bankruptcy court.

Due to the procedure going through federal bankruptcy court, it is always best for individuals to find appropriate representation in bankruptcy proceedings. Experienced lawyers understand the process in the courtroom, but more importantly, they know the order in which everything related to the case must be completed to affect an efficient discharge of the case.

In many cases, there comes a time when many borrowers must seek bankruptcy protection from their creditors. While many people can access and utilize the help of debt credit counselors, others have no choice but to file Chapter 7 or Chapter 13 bankruptcy.

Most people who are in financially trouble prefer to seek protection under Chapter 13 bankruptcy. However the court must approve the plan and before they do so, it will have to be proven the borrower is in a situation where the plan will be consistently met within the borrower's current financial situation. The borrower must have a job to be able to pay back the plan. In addition, the plan must be of a reasonable amount, for it to work.

Many creditors may be reluctant to enter into a loan consolidation plan through a private specialist, but have little choice in bankruptcy courts. They don't always agree to erase all charges either. However, most often the bankruptcy courts will order them to do so. This allows protection to the borrower and gives the creditor no choice but to meet the orders of the court.