Bankruptcy is a way of dealing with debts when you don’t have any available money to pay.Bankruptcy is one of the most unwanted situations wherein a person is unable to pay back their debts when they fall due. This is a bad stigma that abruptly spoils the reputation and credibility of the debtors. In other words, bankruptcy affects the credit report of the individual which derails the process of getting loan opportunities.A bankruptcy filing stays on your credit record for up to 10 years, It’s a very challenging task to buy a car after you’ve filed for bankruptcy. One of the main considerations lenders look at is how long ago you filed for bankruptcy and keeping current on everything since the bankruptcy filing. Most people understand that there are repercussions that include a poor credit score and having trouble borrowing money that goes hand-in-hand with filing bankruptcy.Bankruptcy should be considered only as a last resort. The effects of filing for Bankruptcy protection are long-lasting – up to 10 years in certain states. Recently the rules for filing Bankruptcy changed, and it is now harder than ever to wipe the slate cleanIt is always important you seek professional advice before declaring yourself bankrupt. It may seem very appealing to think you can be debt free especially if you have a high level of debt, but as mentioned earlier, there are some drawbacks to bankruptcy which you need to be fully aware of.For the most part, bankruptcies can be divided into two types — liquidation and reorganization.
It comes under the liquidation category. It’s called liquidation because the bankruptcy trustee may take and sell (“liquidate”) some of your property to pay back some of your debt. However, you may keep property that is protected (also called “exempt”) under state law. There are several types of reorganization bankruptcies, but Chapter 13 is the most common type for consumers. In Chapter 13 bankruptcy, you keep all of your property but must make monthly payments over three to five years to repay all or some of your debt.
It is preferred by debtors who have a valuable asset, such as a home, that is not completely covered by exemptions and that they wish to keep. This is possible because under Chapter 13 a debtor proposes a plan to repay creditors over a three to five year period during which the debtor can make up overdue payments on any assets and pay into the plan the equivalent value of any assets not covered by exemptions. Since the debtor’s plan will require regular monthly or biweekly payments, Chapter 13 is usually only appropriate for an individual debtor who has a regular source of income.
Are you thinking to file a bankruptcy in order to come out of the misery of paying debt every month? Only borrowers in critical financial situations can realize of how it can damage your credit history. However, bankruptcy filling in bad financial circumstances can create more problems for you. It requires constant and deep knowledge of bankruptcy rules and regulations set by your local government and financial institutes. Bankruptcy can bring unexpected losses for you like losing property and affecting credit history. Here are listed some topics related to bankruptcy and when, how and why you can avoid this.
Bankruptcy is the process conducted by the federal court wherein a debtor will have a choice to reorganize or eliminate his/her debts through the assets sale or repayment plan. Usually, debtors file personal bankruptcy based on chapter 7 or chapter 13 while seeing their financial problems.
Seven ways to avoid bankruptcy:
Affect credit report badly: Chapter 13 and chapter 7 bankruptcy put the negative impact on the history of your credit. It usually takes your credit score to 200-250 points, which is very low indeed. Furthermore, this negative entry remains for seven to ten years of your credit history based on the bankruptcy type you have filed. In such conditions, it becomes tough to qualify for new credit and loans in coming three or four years.
Losing property: Borrowers have no other choice than selling certain assets to repay debt according to the bankruptcy plan of chapter 7. Based on the state laws and situation, you may lose your car or even property to pay debts.
Remember, all debts are not eliminated: Majority of people believes in the common myth that bankruptcy can help them in getting rid of all their debts. Student’s loans, back taxes, alimony, child support and some other debts can easily be eliminated through bankruptcy. Truly, if you really want to get rid of these debts, you must avoid the bankruptcy. The best option is to negotiate a plan of debt settlement in order to get out of it.
Lenders/Creditors can repossess your property: After one month, when the case of bankruptcy ends, any lender whose debts didn’t be wiped out can trace you for the loan in case of not getting any payment. They have the right to keep holding your property and other belongings for debt payment.
Unpleasant impact on your funding: It is established the reality that bankruptcy results in adverse financial problems. For example, you cannot purchase or even a car or a home. Filing bankruptcy may also throw bad impact on security clearance when you do not tell your boss about bankruptcy or the reason of its processing.
Failure in new credit approval: After filling bankruptcy, it is tough to get the approval of new credits or loans. You will have to wait for three to four years to qualify for new secured loans unless you request for the credit card based on the high rate of interest.
Retirement plans are not protected: Bankruptcy proves quite troublesome in the long run. Even if your social security. 401ls. Government pensions or other retirement’s incentives can be tapped to debt repayment based on chapter 7.
If you want to save yourself from all these problems, find here of how to get out of debt consolidation without filling bankruptcy.
5 New ways to Avoid bankruptcy
Debt settlement: It is the best option in a situation when you fail to keep up with debt payments. In this respect, debt settlement programs help you to discuss with your lenders for debt reduction.
You may either seek help from professionals of the debt consolidation program. Check out methods to settle your finances yourself and avoid bankruptcy as an easy way out from your debt complications.
Debt consolidation program: Everyone does not like to face complications and problems in resolving financial issues. If you want to save yourself from bankruptcy and make the monthly bill in the single payment at low rate of interest, a debt negotiation program is the perfect option for you.
In this program, you can consolidate your payment bill in low-interest rate for paying off your loans. Consequently, you must use debt consolidation program to avoid bankruptcy.
Debt management: It really works where your credit advisor or debt management agency makes it possible reduce your debt interest levels and bank charges. Your can easily pay your monthly premiums to this consolidation corporation and normally manage one’s bills to find debt free of cost faster.
Payday loan product consolidation: So, If want to avoid bankruptcy and think for payday loans, then payday loan consolidation proves the right choice. Through this program, everyone can replace and consolidate various payday loans along with monthly charge.
DIY plan: It is called Do-it yourself plan in which you try to get rid of debts without any professional assistance. To make this plan efficient, you must negotiate with your lenders and offer them payment based on the amount you can easily pay. You need to cut short your daily expenditures to pay off monthly loans.
If you’re facing problem paying a person’s bills, the advisable option is to consult your creditor and come up with an organized payment plan. It’ll make it easier to avoid bankruptcy and safeguard your consumer credit rating in circumstances of the financial meltdown. What is more important is usually to analyze your particular predicament and find the proper solution for your debt conditions. Compare your debt solutions to select the best option.