Bankruptcy – The Basics

Bankruptcy is a process is there to protect the individual that is filing as well as the company that is owed. How can one process protect both sides? It does this by reassuring creditors their debts will be repaid and also the individual that they will not lose everything they have. It also takes the pressure received off the debtor knowing that the debt won’t ruin or take over their life.

What relief from the harassing creditors do you receive and how long does the relief take? Usually once you file, creditors are not allowed to contact you to pay the debt. They also can not attempt to collect any portion of the said debt until excused to do so from the courts. Not all debts are discharged in any bankruptcy hearing. There is always some debt that remains to be paid.

You may be wondering what causes bankruptcy? I tell you there are no two cases that are exactly alike but there are several similarities. It is estimated that well over 3/4 of all bankruptcies happen as a result of the individual becoming unemployed, medical bills, and or divorce. Filing for bankruptcy is a decision that should be made with the utmost caution.

People usually opt to file Bankruptcy when they feel there is not other plausible way out from under their debts. In order to file the individual must meet certain guidelines of the courts. They must divulge their assets, and debts, income and expenses. The courts also require debt counseling to have been undergone.

The Advantages to Filing Bankruptcy:

o A fresh start to your financial life.

o Collection efforts are stopped upon filing

o Stops wage garnishments

o Can keep all or at least some of the equity in your home

The Disadvantages to Filing Bankruptcy:

o Stays on credit record for years to come

o Makes getting credit harder if not impossible

o May lower opinion of ones self worth

If and when you do decide to file remember, this is a serious matter. Seek out a professional with the experience you deserve and need. Avoid costly mistakes. Do not represent yourself. You may not workout a settlement in your own best interest.

Source by Tim Wilson

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