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By: Ikedi Ani-okoye.

Introduction to Bankruptcy

The Dreaded Word "bankuptcy" is some thing nobody wants to declare, but bankruptcy is a reality for a lot of people. This is usually due to situations beyond their control and is not attributed towards poor financial management. But whatever the reason, one of the problems faced by consumers who declare bankruptcy is getting their life back on track.

Filling for Bankruptcy

After filing for bankruptcy, you are left in an uncredit worthy position and this is up held for yearst, and it may seem almost impossible to get approved for a new line of credit, even with a local Personal Bankruptcy is rare but not unique. When opting for bankruptcy you need to be clear on the meaning, when to opt for it, the right process for declaring bankruptcy, and what the implications. It is a merciful process by which even a severely indebted person can disentangle himself from all of his obligations. By filling bankruptcy a the court system takes over a persons finances and appoints someone to make an estimate of his debts ways to repay them.F rom then on creditors are notified not to make any attempts to recover their money from the debtor.

What the US law says about Bankruptcy

In the US you can file Chapter 7 (for irreversible insolvency) or Chapter 13 (for temporary insolvency) bankruptcy. Chapter 7, the bankrupt is can retain exempted assets and property. However, the recent tax obligations and the debts to government units are not exempted. Those having steady source of income can only file chapter 13 bankrupty. This kind of bankruptcy gives indicatation that the bankrupt is willing to pay his debts within 5 years.

Advantages of bankruptcy

Applying for bankruptcy can provide new financial start which is the major avantage a consumer should consider when deciding if filing a Chapter 7 is the best choice for them. Chapter 7 bankruptcy is a better option for debtors who have little or no property and mostly unsecured debts. You can choose what debts you wish to file Chapter 7 bankruptcy. This includes both secured and unsecured debts. Unsecured debts are those like medical bills and credit cards. A secured debt is when you have decided to use collateral that can include your home, car, or other major assets you have ownership of. Chapter 7 bankruptcy is also referred to as liquidation.

Disavantages of Bankruptcy

Filing for bankruptcy is not without disadvantages. Bankruptcy will reflect on your credit report for ten or more years making it hard for to get credit. It may also be impossible for you to get financing. Once you are discharged from your debts, you will not be able to obtain a discharge for another six years. Any new debts you incur after filing for bankruptcy will be exempt from discharge. If you have a co-signer when you incurred a debt, the co-signer will be made liable for the entire debt (except for a Chapter 13 bankruptcy).

CONCLUSION

Before declaring bankruptcy it may be a good idea to approach Creditors, Unsecured loan lenders as they will realize they have much to lose when you declare bankruptcy they are more willing to reduce or even eliminate any interest, late fees and other charges in order to get back a portion of their money. You can get some real deals here. However, you will not be granted any more credit with them for obvious reasons. Always way up your options before declaring bankruptcy.