Debt and Bankruptcy

Are you so deep in debt that you are considering bankruptcy? Be clear about what bankruptcy really is first. Either the debtor or the creditor can file a petition for bankruptcy to court. Most of the times, however, it is the debtor who does the filing. This is not so surprising because it is more beneficial to him or her than to the creditor. During the process of bankruptcy, whatever assets the debtor has are assessed and paid to the creditor. This means that although the debtor loses property, the creditor may not be able to get the full payment. After bankruptcy, the creditor can no longer even run after the balance still left unpaid. the only benefit a creditor can get out of the proceedings is being able to investigate the debtor’s finances. The debtor, on the other hand, can start afresh financially.

When should you file for bankruptcy?

File for bankruptcy when there is no other way out of your debts. You probably have checked your assets and income against the amount you have to pay and can see that it is impossible to pay for all the debts you have incurred. Of course, your creditor could have filed for your bankruptcy even before you have even considered it.

What debts get erased when you are declared bankrupt?

Are you really completely set free from all debts after the bankruptcy proceedings? Filing for bankruptcy requires your presence of mind on this matter. This is because debts that you have not listed in your petition are not forgiven. Debts that are erased are those included in the file but are not required by law to be paid. For example, student loans, taxes, child support, and penalties from breaking the law remain standing.

What are the points against bankruptcy?

Bankruptcy is highly publicized and can ruin your image. Future creditors will have problems trusting you with loans. Bankruptcy even sticks to your credit report for a maximum of ten years. You will also feel a loss of control when the court decides what to do with your assets. You can no longer choose which ones to sell and which ones to keep to pay for your debts.