Due to the tough economic climate, many of us have a tough time settling our financial obligations, and it getseven harder after a personal health problem or if someone in the family becomes sick, being laid-off, or mere overspending. For some people, these debts can be so overwhelming that it takes over their life, and they ultimately will be left with only one option – declaring bankruptcy.
Personal bankruptcy is deemed as the final option with regards to managing one’s debt because it can impact your life considerably for a long time.. People who declare themselves bankrupt receive a discharge which states they need not settle certain debts, which could give you a new beginning. Unfortunately, your bankruptcy court records will be kept on your credit report for a decade. People who have bankruptcy history will find it challenging to obtain credit, life insurance, mortgage for a house, and in some cases even have a job.
Those who declare bankruptcy can choose between two kinds, namely, Chapter 13 and Chapter 7. The former lets those who have a reliable income to retain their property, for instance a mortgaged house or car, which they may otherwise lose through straight bankruptcy. In most instances, the repayment plan would extend to a 3-5 year period, and once you’re done with all the repayment you will will be handed discharge of your debts. Chapter 7, also referred to as straight bankruptcy, will lead to liquidation of all non-exempt properties. Your property might be offered to an official appointed by the court, or given your creditors.
Considering the impact that bankruptcy exerts on one’s life, it is essential that you be mindful of your spending or your finances to prevent it from happening. Firstly, you should develop a budget. You can do this by recording your income from all sources, then listing your fixed as well as variable expenses each month. By using this method, you can keep track of your spending habits, identify necessary expenses, and know how to prioritize your spending.
Also attempt to contact your creditors immediately if you have difficulty in settling your obligations. In many instances, they will draw out repayment schedule that is more achievable for you. Mortgage providers can even suspend your payments for a short time if they think the problem is non permanent. Finally, get help from professionals. There are plenty of agencies that offer credit advice for free or for a fee, and it is not surprising to discover one in your locality. For more information about the effects of bankruptcy and how to prevent it please visit this link.