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Declaring
Bankruptcy: Your Last Resort
Dealing
with the real world brings about another identity from
us, that is, our financial selves. With how closely
interwoven the real world is with economic matters, our financial
self is usually made a gauge to reflect our worth as a person.
Call it unfair and demeaning, but the fact is, people will
not transact with us on a financial level if we have a less
then stellar financial self to present.
That our financial selves would encounter some difficulties
from time to time is a given. Sadly, most people seem to experience
the worst end of these hardships, and they are left in ruins,
unable to pay their bills and the other demands of their financial
lives without sacrificing their daily needs for sustenance.
These difficulties can be attributed to a lot o factors. Financial
mismanagement, of course, is the primary culprit. Unexpected
contingencies striking like thieves in the night can also cause
our financial downfall.
These difficulties are made more unbearable when we have several
loans to pay. Our incapacity to satisfy these loans can bring
about more troubles of the legal kind, and worse, the surrender
of certain properties we need for a good life.
Often, people situated as such would rather disappear from
the world to escape from their many obligations. Fortunately,
there is a legal way to do this, through the process popularly
called as bankruptcy.
What Is Bankruptcy?
Declaring bankruptcy is a way to dissolve your existing debts.
The way it goes is that you will have to file an application
before the appropriate court. The court would decide if your
petition is meritorious, that is, it satisfies the following
requisites:
- The
applicant is incapable of satisfying all of his debts when
they become due.
- The
applicant has filed the petition in good faith, meaning,
it was not a deliberate attempt to
evade his creditors
and his liabilities.
- The
applicant has exhausted all other available remedies and
he has no recourse left but to apply
for bankruptcy
proceedings.
If the court declares you bankrupt, your assets would be delivered
to a trustee. The trustee would be charged with the responsibility
of assigning portions of this estate to your creditors, in
proportion to the amount you owe them. Upon exhaustion of your
assets, you’d be free from all your existing debts. The result
is a fresh start for your financial self.
Consequences Of Bankruptcy What shouldn’t be neglected, however, are the strict limitations
that being declared as bankrupt would impose on your financial
life. Your line of credit would be suspended, which means that
you are barred from acquiring new loans. This may prove to
be a problem if ever the need arises within the 2 year period
(more in certain cases) of your credit suspension.
Also, your state of bankruptcy would be reflected on your
credit report. Aside from future problems with creditors regarding
your loan applications, this might be taken as a negative sign
by employers who would review your credit history to determine
your financial fitness.
If all of these consequences perfectly justify the dissolution
of your current debts, then the first step in bankruptcy proceedings
is to consult with a bankruptcy lawyer.
Two Types Of Bankruptcy
The most popular type of bankruptcy is what is called as Chapter
7 proceedings. This type incorporates the details we have discussed
so far, most notably the liquidation of your assets to partially
satisfy the claims of your creditors. The trustee would call
on such creditors for what is called a 341 meeting, where your
assets would be assigned in proportion to their respective
claims. Any amount that your assets would fail to satisfy would
be written off as losses for your creditors.
There are other types of bankruptcy proceedings, but instead
of involving the dissolution of your loans, they involve the
restructuring of your debts to fit a schedule that would be
amenable to your financial capacity. The negative effects are
less than those that result from Chapter 7 proceedings, but
your debts won’t go away.
What bankruptcy proceedings to pursue would depend on you.
Try to consult with your bankruptcy attorney to get the right
advice that would be most beneficial for your situation.
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by SolveYourProblem.com : 2006
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