Filing for bankruptcy may provide an instant relief to the people in debts who are been regularly threatened by their creditors to pay their bills. You can get your debts discharged after filing bankruptcy. Though it may stop the creditors and collection agencies calling you repeatedly to pay your bills, it can also cause a deep damage to your assets and credibility. You can even loose your car and house once you filed for bankruptcy and everybody needs these two things for their existence.
Once the process of filing for bankruptcy has started, you and your family may be in the situation of losing control over your financial assets because it will be taken over by the trustee or the official receiver and the presiding magistrate. He will start liquidating your assets to pay off your dues to your creditors.
Be aware that while you are in the process of filing for bankruptcy, your financial credibility will be at stake and it will take a long time to rebuild your credit history. The blemish of filing for bankruptcy will stay on your credit report for ten years and it will be too hard to get new credit in the initial years.
Talk to your creditors and try to work out a repayment plan before taking the decision to file for bankruptcy. If you have managed to work out a repayment plan with your creditors and fail to stick to the plan, they will report your untrustworthiness to the credit bureaus and the missed payments will be reported on your credit report for seven years.
The blemish remarks on the credit report will make it very tough for the individuals to get any mortgage or any other credit such as a card or a loan for years to come. Even if you manage to get a loan with bad credit, the interest rates will be very high. It will become absolutely impossible if you just pay little over the minimums because the maximum portion of your money will be eaten in interests and fees only. Nothing will go towards the principal amount.
The consequences of filing for bankruptcy can be dangerous. If a tenant files for bankruptcy, his landlord is informed. The employment prospects are ruined beyond easy redemption. Bankruptcy will discharge all the unsecured debts but you will still be responsible to pay back the secured debts like you car loan or home loan. If you don’t pay the monthly payments, your car and home may get repossessed. Bankruptcy will not discharge your taxes, medical bills, student loans, fines and penalties imposed due to the violation of any law. The best course to avoid bankruptcy is to budget your finance in a proper and more meticulous way and seek credit counseling before it gets too late.
This entry was posted on Thursday, July 3rd, 2008 at 10:35 am and is filed under Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Filing bankruptcy takes several steps that start with filling out the bankruptcy forms detailing your debts and expenditures.
After your forms are complete you will need to deliver them to the bankruptcy court in your district along with the filing fee (which can also be paid in installments). Many districts will allow you to mail in your petition.
Three to four weeks later you will be required to go to court for what is called a “341 meeting”. This is handled by the case trustee (not a judge) and generally only lasts a few minutes. The trustee will ask you to verify if the information on your forms is correct and that you have included all your asset info. Creditors are allowed to attend these meetings but rarely if ever do.
Four to eight weeks later you will receive your final discharge by mail confirming your discharge and that’s it.
During this process you will be under protection of the “automatic stay” from the moment you file your bankruptcy petition which forbids any creditors from contacting you or going forward with any lawsuits, foreclosures, or garnishments.