These days many people consider declaring bankruptcy as the easiest method to rid themselves of debilitating financial debt and as such it is the first strategy employed. Although declaring bankruptcy can certainly relieve one's debt, it is far from an easy and painless process and should only be used as a last resort.
Even though the laws have made it relatively easy to file the bankruptcy papers, getting involved in the legal process - like any legal process - is far from painless. Providing detailed justification for your filing including exposing all of your financial history to the bankruptcy judge and opening yourself to objections from your creditors. Contrary to popular opinion, your creditors will probably not happily agree to settle for pennies on the dollar on what you owe them.
Even if you emerge from the bankruptcy process successfully, there are numerous long term ramifications that you will want to consider very carefully before taking this drastic financial step.
You will lose any of your credit cards that have balances on them, and other credit card companies my also close your account as a result as well. Getting any type of credit such as a home or car loan is going to become next to impossible. In fact, short of signing on for credit programs with ridiculously high interest rates which only add to the problem, you'll not find much in the way of revolving credit available to you.
In addition, keep in mind that not every type of debt will be absolved via the bankruptcy proceedings. Debts such as back taxes and student loans are generally exempt from being wiped off the books.
Your new credit profile will persist with you for several years after the bankruptcy has been discharged. During this time you want to stay on a tight path of rebuilding your credit until you can get it back to a working level. Potential creditors always view any record of a past bankruptcy on your credit history as a major red flag.
Even beyond the impact that a bankruptcy has on your credit, you may actually be required to turn over real assets to a court appointed administrator of your bankruptcy case. These items can include just about any non essential items. Most states do make exceptions for your primary residence and your automobile.
And let's not forget that the process of filing and subsequently entering the bankruptcy proceedings is not in itself free. There will be court fees at the very least and if you go through an attorney; you know they don't work for free.
Even so, for many, the relief that you get from debt collection efforts by those creditors that you owe money to is a huge burden to be lifted. Your wages can not be garnished and any foreclosure action will be stopped.
Not having any access to credit card can actually be an advantage for those who struggle managing revolving credit. Having this type of restriction for a long period of time can actually help those to acquire more frugal spending habits and develop a higher sense of responsibility for managing their finances.
No matter, bankruptcy will serve as a huge wake up call. For some people, a mandated change in how they handle their credit via bankruptcy is the only way to start making positive changes.
Even though feeling as though you have hit rock bottom financially is a terrible situation; take under careful consideration of the use of bankruptcy and use bankruptcy only as a last resort.
For more information on bankruptcy, be sure to visit onwebnet.com where you'll find information on topics such as bankruptcy laws, bankruptcy filing, bankruptcy help, & & more articles.
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