Tuesday, June 26, 2007

Declaring Bankruptcy

Declaring bankruptcy is the last resort for anyone experiencing financial setbacks for any reason. Sometimes there is just no alternative at some point other than claiming financial ruin. Other times, there can be poor money management and financial planning that leads to learning about bankruptcy the hard way. Tragedies such as divorce, job loss, or other unexpected circumstances can cause unwanted financial decisions. For consumers in a difficult financial situation, learning everything they can will be helpful in determining whether or not to choose that option.

Taking drastic action does not solve financial debt and wipe the slate clean as some consumers might mistakenly assume. There are many repercussions that affect anyone who necessarily files. Not to mention the emotional toll that declaring bankruptcy can take on a household, there are several other issues to consider before making that last resort financial decision. Debts that include back taxes or student loans do not resolve through filing. Also, child support obligations remain no matter what action is taken.

If a consumer, unfortunately, has also been involved in some sort of fraud that is related to a debt or debts, this action will not alleviate the pay back of that financial obligation. It is important to understand many issues that affect debt status if forced to claim financial ruin for whatever reason. Make sure to note that declaring bankruptcy does not alleviate debt strain in several areas and the other surrounding difficulties do not abate even after filing. There are several other issues that need to be considered.

A practical financial issue to consider when considering the choices is the fact that declaring can cost even more money on top of what is already owed. There are many fees such as lawyer's fees and other expenses that are incurred during the process. Even if some relief from creditors and other surrounding pressures about bankruptcy, the after effects can follow you for years. When filing, it will remain on credit record for 7 to 10 years. This creates a snowball effect on finances for the future and can cost money in other areas that may be overlooked when thinking about bankruptcy.

It is difficult to receive housing loans or other types of loans after filing. This is a hard circumstance to be in, especially if this was a result of circumstances beyond personal control. The interest rates will be exorbitant and the loan terms will be much more stringent. Another issue to consider is the fact that sometimes even employment options can be affected. Some employers will not hire anyone that has declared bankruptcy and require that credit histories are acceptable before hiring.

Even for those who do no have good credit, but have not thought about bankruptcy as an option can have a difficult time getting approval for apartment rentals if the housing management requires stringent checks on consumer credit. It is very important to consider all the repercussions before choosing that option regarding personal finances. Even though it may seem that declaring bankruptcy is almost the end of the world for some consumers who are in a financial sink hole, there are still ways to begin to repair credit and work out of the financial entanglement.

For those who are thinking about this path out of necessity, there is hope for repair through financial strategies such as securing co-signers for loans, retaining a zero balance credit card, and proving an acceptable income ratio to any debt still carried. Also, if you want a more aggressive way in which to deal with debt repair, there are many law firms and debt repair services that are knowledgeable about repair issues. Check out several options for the most credible debt repair source that understands about these issues. "Ponder the path of thy feet, and let all thy ways be established." (Proverbs 4:26)

Although there are many cases in which wise consumers are put in circumstances that are not their making, many times bankruptcy can be avoided if a consumer is disciplined in money matters. There are many sources such as consumer counseling agencies, Christian ministries and debt counseling companies that offer financial management and budgeting education for consumers. Learning about debt management, household budgeting, saving, retirement planning and many other issues is important in order to provide a sound financial future.

http://www.christianet.com/bankruptcy/aboutbankruptcy.htm