Deciding if Bankruptcy is Your Best Option

The legal process of bankruptcy enables individuals and companies to relieve themselves off their financial obligations by declaring their inability to make repayments. Of course, this process is not as easy as it sounds. It is not something you can enjoy without something in exchange. Those who are considering bankruptcy, best be aware of the repercussions of this process in order for them to make a sound decision. Here are some considerations to help you decide if bankruptcy is the solution to your problem.

Study your Options

Before making a decision to file for bankruptcy, it is crucial that you study about it first so you know exactly what you are getting yourself into. For individuals, bankruptcy comes in two types: Chapter 7 and chapter 13. In Chapter 7, your unsecured debts will be removed within a 90-day period. However, your properties will be sold to pay for your creditors. In Chapter 13, on the other hand, you are allowed to keep your property but your debts will not completely disappear. They will be replaced by a debt repayment plan, which you have to pay for 3 to 5 years. If you want to eradicate your debts, Chapter 7 is ideal for you. However, if you wish to keep your property, you may want to go for Chapter 13.

Know the Consequences

Aside from the options, you should also learn about the consequences of bankruptcy so you would know what to expect. Obviously, this legal process will have negative effects in your life. One of these is the difficulty to take out loans or get credit cards in the future. Bankruptcy will taint your credit rating for a long time. In Chapter 7, it will stay on your credit report for 10 years while in Chapter 13, you only have to bear with it for 7 years. Apart from that, filing for bankruptcy may result in loss of properties like your home and car. On a more personal level, your career can also be affected. Some business organizations do not offer certain positions to people who have bankruptcy in their records.

Get Legal Help

All things considered, if you do decide to file for bankruptcy, it is best to hire an attorney to represent you. See to it that you have a trustworthy lawyer by your side to guide you along the process. While this would mean money out of your pocket, the invaluable help you get is certainly worth it.

For many people, bankruptcy is a desperate measure. It is often perceived as the last resort or the only way out of financial woes when there is no other option left. To know if this is the right path for you or not, consider getting advice from a finance lawyer, an independent financial adviser, and people you know who have gone through this same predicament.

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