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Bankruptcy is too drastic an option to be your first choice. If you have little income and no assets, for example, you may be "judgment-proof," which means creditors can't take meaningful action against you and that bankruptcy might be unnecessary. Bankruptcy is the process where a person legally declares himself or his business unable to pay outstanding debts. Depending upon the type of bankruptcy filed, one meets with a judge to determine a payment schedule, or have a legal bankruptcy discharge most if not all debts. Bankruptcy is a scary proposition. The word "bankruptcy" itself sounds so ominous.
Debts are prioritized, and secured creditors get paid first. Remaining disposable income goes to pay unsecured creditors, in a hierarchy established by the Bankruptcy Code. Debtors should inquire about such additional costs when contacting an attorney about bankruptcy.
Debt consolidation program is favorable for those who're looking to reduce their monthly outgoings and save dollars. This is where you'll have a debt consolidation company/law firm negotiating with your creditors or collection agency in order to lower your interest rates and reduce or eliminate late fees or over-limit charges. Debts that are not eligible to be discharged include child support payments, some taxes, and student loans. Car loans, house mortgages, and other secured debts are also not discharged.
Bankruptcy consists of several different mechanisms for addressing financial problems. For individuals, the choice often comes down to Chapter 7 or Chapter 13 of the Bankruptcy Code. Bankruptcy is the single worst thing you can do to your credit scores, the three-digit numbers lenders use to gauge your creditworthiness. That means, for a time at least, it will be more difficult and expensive for you to get credit. Bankruptcy is a somewhat complex procedure, and even more now so with the new Bankruptcy laws in effect, making it harder for people to abuse filing for Bankruptcy. Many people look at Bankruptcy as a "get out of jail free" card.
Chapter 7 bankruptcy involved the liquidation of assets to partially or fully pay of the creditors. There are cases in which there may be no assets to liquidate, but if there are, then the individual may lose some of their property. Chapter 13 allows you to keep some of your assets, as long as you repay them on a payment plan. It will also allow you to discharge some of your debt, but not all of it. Chapter 7 cases, whether dismissed or not, remain on your credit file for 10 years. Successful and unsuccessful Chapter 13 filings stay on your reports for 7 years.
Chapter 13 bankruptcy stays for seven years. However, if someone inquires about whether you’ve filed bankruptcy at any point, ever, and you don’t own up, that’s criminal fraud. Chapter 7 personal bankruptcies normally include liquidation and seizing of assets which are bonds, valuable property, stocks and real estate. One the assets are liquidated then the proceedings are being utilized for paying-off number of creditors you owe.
Chapter 7 Bankruptcy stays on your credit score for 10 years. Chapter 13 bankruptcy stays for seven years. Chapter 7 personal bankruptcies normally include liquidation and seizing of assets which are bonds, valuable property, stocks and real estate. One the assets are liquidated then the proceedings are being utilized for paying-off number of creditors you owe.
Bankruptcy should be the last thing on your mind, when you have exhausted of any other idea to repay your loan amount. Only when you find no other way to get out of your debts, you may file bankruptcy. Bankruptcies are a net positive for the economy because more productive competitors are rewarded by opportunities to buy up remaining assets at bargain prices to strengthen their operations. In an economy that allows this kind of growth and change, any jobs lost by bankruptcy are soon replaced by new ones as the most efficiently managed businesses gain access to more assets and expand. Bankruptcy is a darn good deal for many of those who are in 30k of debt. Slap down $1500 and your debt is, more or less, wiped clean.
Bankruptcy is not something I recommend any more than I would recommend divorce. Are there times when good people see no way out and file bankruptcy? Bankruptcy is a particularly irrational choice for high-income people who can afford their monthly payments. They'd still have to repay the written-down part of the mortgage balance out of income earned for up to five years, to the extent possible, after paying back secured debt. Bankruptcy is when your assets are tied up and you cannot pay your debts. There are a number of different bankruptcies that are open to individuals.
Bankruptcy doesn’t prevent anyone from living within their means and saving money. Bankruptcy’s are also at an all time high, so please don’t play around with debt. Bankruptcy’s are not a get out of jail free card. It will leave a huge mark on your credit score that will likely be un repairable.
Bankruptcy is about fresh new starts, and that’s what this article is about, how to make the most of that new start. Bankruptcy is important when there is a major medical crisis and other real-life crisis situations. But if it is just the latest in a string of poor money management decisions, then I think of the insanity quote: "Insanity is doing the same thing over and over again and expecting a different result". Bankruptcy is not an option for you- unless you are unable to work hard to repay your obligation. If you are capable of working a decent paying job, you will regret bankruptcy for the next 7 years or longer.
Bankruptcy may be the immediate solution but that can prove unsafe in the long run. As bankruptcy stays on your credit report for 10 years so till then after that you would face difficulty in getting loan, purchasing or leasing anything as your credit score gets down due to filed for bankruptcy results in a 160-220 point deduction on their credit score and if a delinquent account is added to the individuals credit file, 70-120 points are subtracted.