To Bankruptcy or Not To Bankruptcy - That is the Question
To become a respected member of the so-called “affluent” society, you may have squandered your finances and ended up accumulating a mountain of debts. When things go beyond manageable limits, one of the solutions that you can look to is filing for bankruptcy. By filing for bankruptcy, you’re telling your creditors outright that you won’t be able to pay what you owe from them anymore.
The bankruptcy law of the USA is contained in the Bankruptcy Code, and each bankruptcy type is described in several chapters. Bankruptcy of individuals is outlined in chapters 7 and 13. By filing bankruptcy invoking chapter 7, you agree that all your assets will be used to clear up your debts. But if you’re not willing to forgo your assets or if you’re in a corporation or a partnership, you can file your bankruptcy invoking chapters 11 and 13. Chapter 13 gives you a repayment plan for liquidating your debts.
Though the strategy of filing bankruptcy relieves you of your tension, life is not the same after it. You can’t raise money by way of credit, for one. Sometimes, your attempts to get employed or rent a house may fail because employers and landlords typically check for dependability via an individual’s credit record, whichin this casecontain your bankruptcy history (which stays for ten long years).
There are also certain legal and social obligations that you still have to settle. In the process of bankruptcy, every debt is discussed so creditors can still argue with the judge that their credit shouldn’t be included in the bankruptcy decision-making.
A bankruptcy attorney is the person better able to advise you about the United States Bankruptcy Court and other State laws that govern the bankruptcy process.
Since each chapter discusses a separate type of bankruptcy, you must also study the whole Bankruptcy Code so that you’ll be equipped with the knowledge on what’s most suitable for your purpose. For example, mortgage foreclosure can be stopped with chapter 13 and chapter 7 discusses unsecured debts. Your creditors also cannot compel you to pay, foreclose on you foreclosures, or repossess your properties.
But you have other options besides bankruptcy. You can have a frank discussion with your creditors just to evolve a suitable repayment scheme. Your creditors will readily agree to this because they know that a bankruptcy will be detrimental to their interests. A debt counselor can also work out such a repayment scheme for you. These two options are good in the sense that you will not have the black mark of bankruptcy.
In the case where there are no steady incomes or assets to draw from, there may not be a need to take any action to clear debts. Bear in mind that the credit record will not have the details of debts aged beyond seven years.
