Going Bankrupt
Sunday, November 2nd, 2008Going bankrupt is very common these days, most everyone knows or has heard of someone who’s had the misfortune of filing bankruptcy. There is a long list of reasons for this, however the most prominent are loss of job, unexpected medical bills, becoming disabled and of course the housing market crash which inevitably left a great number of home owners with high interest rate loans they could no longer afford. Desperate times cause many people burdened by overwhelming debt to commit fraud while filing bankruptcy, by not reporting all assets or disclosing their true financial state.
Personal bankruptcy is a way for a citizen to legally find relief from debt, these are the rights that have been extended to all Americans by the Federal government. However within these laws also exist specific qualifications rules, which can not guarantee that all who are ridden with debt will be able to benefit from these bankruptcy laws. Causing some to get creative or seek advice from the wrong sources about how to get around the system and appear to be going bankrupt.
This of course has serious consequences, since almost always, the fraud will be detected and stopped before the case is dismissed.
Those who are legitimately going bankrupt have some options when dealing with their debts and debt collectors. Despite the benefits the filers gain from filing bankruptcy, they often remain wary of the effects that personal bankruptcy leaves on their records, which lasts from 7 to 10 years. During this time potential filers may not realize that bankruptcy is in fact a good option, so they may follow the wrong advice and opt for debt consolidation instead in order to avoid bankruptcy, this is not necessarily a good option in most cases.
Debt consolidation can make sense in some cases, if the debt is mostly unsecured, meaning mostly credit card debt, this typically makes you a good candidate for debt consolidation if you’re still able to make your payments on time. However debt consolidation is not a comparable option to filing bankruptcy. The benefits of filing bankruptcy far outweigh those of debt consolidation for a few reasons.
When you being to accumulate debt, not only unsecured debt, but secured loans, mortgage debt, personal debts etc. Your ability to pay all these debts suffers severely when you lose your job or your main source of income disappears. Even in situations like this you may be hear the advice of debt consolidation specialists that grouping all your bills into one is a good idea. It is not.
Going bankrupt means losing the ability to pay your creditors at all, not necessarily struggling to pay them each month. Both are good reasons to file bankruptcy, however neither is a good reason to simply opt for debt consolidation and the reason why is that under bankruptcy you have certain legal rights that no debt consolidation agency can extend to you. Such as the power of the automatic stay, which provides a shield of protection from creditors, meaning no one can harass you and try to collect from you while you’re in the process of discharging your debts.
Depending on which chapter you file, you may either fully discharge your debts or establish a repayment plan that allows you to repay your debts in a period of 3 to 5 years. In some cases your overall balances may be decreased or interest eliminated.
It’s not easy to accept that you’re going bankrupt but it needs to be clear to you that you have legal rights that can protect you from creditor harassment and if you can not make your payments anymore, then bankruptcy is something you need to consider. Start by contacting a lawyer in your area. Also remember that bankruptcy consultations should be free, so find a legal office that does not charge for this.
