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Bankruptcy, Can It Do Anything For You?

Bankruptcy, Can It Do Anything For You?

Is one’s personal income not sufficient enough to pay the bills? Are the creditors knocking down the door demanding payment on what is owed to them? Is the house about to be foreclosed on and lost? Many are facing such circumstances and believe that bankruptcy is the only answer to their problems. Many feel that they have no choice but to file. What then should they know before taking the steps on the road to declaring themselves bankrupt?

What then is meant by the term going bankrupt? In simple terms it is a debt relief system created in order to protect those in debt from their creditor’s harassment. Under this system the rights of creditors are also addressed and protected as well. But in the majority of cases the debtors are relieved of their debts without having to make any more payments on them.

So once that debt is discharged a creditor must stop harassing those that have filed. In fact it is the only debt relief program that they are required to follow. Others like credit counseling and debt consolidation they can ignore if they wish.

One thing they should consider is if there are alternatives to that drastic step. After all bankruptcy should not be looked upon lightly. It can have a devastating effect on those who go through with it in the emotional sense as well as the economic sense. One’s confidence can be shaken in the area of making major financial decisions.

One alternative that one can try is to negotiate with their creditor. Ask them if they will give a person more time to pay. Explain the situation that is causing the delay and the request. If that does not work then tell them that there is no choice but to file for bankruptcy. After all in some cases it is a very powerful negotiating tool. But if not then one must do what they must do in order claim a fresh start in life.

Another thing that one needs to think about and be aware of when making the decision about whether or not to declare that one is bankrupt is the debts one actually owes. Which ones a body will be able to discharge and which ones will not be allowed by the law to discharge. For example if one has a tax judgment against them, child or spousal support payments to make, or other debts owed to a government agency then bankruptcy will not help.

Other disadvantages to filing for bankruptcy are that certain luxury items the filer may own may be forfeit. Credit cards may also be lost if they are not paid off prior to the final filing date. Mortgages are also tougher to get after a recent declaration as well.

There are times when bankruptcy is considered the answer to a prayer. Pressure that is a direct result of heavy debt becomes lifted and a brand new life is set to begin. Hopefully though there will be no need to repeat the experience as the lesson it has taught will have been learned.