Bankruptcy is often the last recourse for debtors. Bankruptcy has been around since Genghis Khan and thankfully the punishment for debtors are no longer as harsh. When you declare bankruptcy you are stating that you are unable to pay off your debts. This act alone does not free you from all of your financial obligations to those institutes that you owe, but it does have several benefits that are advantageous.
Bankruptcy should not be seen as an quick fix. In fact bankruptcy will have a devastating effect on your credit score which may never fully recover. After declaring bankruptcy you might find it impossible to find a credit card or a loan with interest rates that are not sky high. With all the negatives involved in bankruptcy why is that so many people see it as a viable option?
For those facing mountains of debt, angry bill collectors, and the possibility of loosing their home, bankruptcy provides a certain amount of relief. Declaring bankruptcy will let you breath and catch a break. You will be able to rebuild your life and your financial standing without worrying about foreclosure, repossession, or other stressful events.
In fact, this is the greatest advantage about declaring; the reprieve from the collection agents and the garnishes placed on your check. Once you file for bankruptcy, the bill collectors will stop calling, the foreclosure, and the repossession measures will come to a halt.
In some forms of bankruptcy, all of your debts are absolved; however there are forms where you will still be responsible for partial repayment. If you have to make payments they will be on a plan that is manageable for you and your current financial state. Usually these plans only last a few months to a couple of years after which any remaining balance is forgiven.
There is a concern about having your assets liquidated and distributed to those you owe money to. If you only have exempt property like clothes and an older model car then you will not have to give up anything.
After declaring bankruptcy you are granted a great opportunity to start a new and learn from your past mistakes. This means developing a realistic budget and sticking to it. After a few months you may be presented with new credit card offers. These cards will likely have higher fees and a lower credit rate given you financial history. At this point you may be tempted to accept the cards but you need to remember that, more often then not, it was credit cards that led you into ruin in the first place.
Bankruptcy should not be viewed as an easy way to get out of financial trouble. Bankruptcy is a very serious event that should only be used by those that have absolutely no other options open to them. Before filing make sure to weigh the pros and the cons carefully and seek the advice of a lawyer or bankruptcy councilor who will be able to tell you what the drawbacks and benefits will be. Bankruptcy laws differ state to state; area to area so you will need to learn what to expect before you file.
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