You may end up getting mad at yourself because you ended up with a pile of debts that’s getting to be too much to deal with. If things are getting out of control, there’s always the bankruptcy option. When you file for bankruptcy, your creditors will have to accept the fact that you won’t be able to pay your dues. Once you’re through with the bankruptcy process, you can plan your life afresh.
Bankruptcy in the US is specified in the Bankruptcy Code, in which chapters 7 and 13 discuss individual bankruptcies. In the chapter 7 bankruptcy, your assets are used for discharging your debts. But chapter 11 and chapter 13 bankruptcies are resorted to by people who aren’t willing to part with their assets and those who have stakes in a corporation or in a partnership. In chapter 13 bankruptcy, you’ll have a repayment plan to service your debts.
There are accompanying difficulties to a bankruptcy, one of which is that you may not get new credit. Also, certain employers and landlords insist on looking at your credit history and since it will contain the details of your bankruptcy for 10 years, it may be difficult for you to get an employment or a new lease.
Bankruptcy relieves you of unsecured debts but you won’t be able to escape other obligations. Every debt must be specifically dealt with. A few creditors can also attempt to convince the bankruptcy judge that their debts shouldn’t be covered by your bankruptcy proceedings.
As the first step, you must consult a bankruptcy attorney. Only the United States Bankruptcy Court deals with these types of cases though state laws may also govern them.
Since different chapters deal with different types of bankruptcies, you must study each well to decide which type of bankruptcy applies to you. While chapter 13 can get you the benefit of stopping mortgage foreclosure, chapter 7 discusses unsecured debts.
The immediate effect of filing bankruptcy is that your creditors will stop coming after you. Further, other collection activities like foreclosures and repossessions will also cease.
But you should know that bankruptcy is not the only option. You can try to convince your creditors to evolve a debt repayment plan. They may be receptive to this proposal because if you file for a bankruptcy, they will be forced to forgo a major portion of your credit.
A debt consulting agency can guide you in drawing up a suitable repayment plan. By choosing to adopt these plans, you get the benefit of avoiding the black mark that comes with bankruptcy.
In unique cases where the individual doesn’t have steady income or a property, it’s better if they keep quiet without taking any action. Your credit history won’t be having the details of debts aged 7 years and above anyway.
