Declaring bankruptcy is a tough decision that some people have to make. Although this might seem to be the answer sometimes it truly is not. It is always very important to talk to professionals and see what they think before you make such a huge step in your life. It is also important to understand that if you declare bankruptcy you will be changing your life forever and nothing will be the same again when it comes to your finances. Make sure you think twice and always have alternatives. It is also very important to talk to professionals of the field or even an attorney to get a very good idea of the other options that you have before you finally decide if declaring bankruptcy is indeed the right thing for you to do at the moment.
If you declare bankruptcy, here are the options you have:
There are three different modalities used to declare bankruptcy, and you should choose only one. Before you make the decision it is very important that you understand what the main differences between them are.
Chapter 7 Companies here get rid of their debts however will have their assets given to creditors as a way of compensation. As for average people in some cases they will have to give their assets and in some they will not. As for the debts they will also get completely rid of them.
Chapter 11 this is a very good option for companies, after all here the companies (and people as well) will be able to get some extra time with their creditors. Here companies do not need to sell their assets because they will find a better way to pay their creditors. They set a time frame that they will have in order to pay the debts off while the business is still running.
Chapter 13 Here you will not have your assets as a way to liquidate the debts, however you will be able to pay your debts with your future income. There are two things to consider when you choose the chapter 13 method:
- The total Value of equity in your assets
- Overall income and expenses that you have per month
Get ready to have your financial life exposed if you declare bankruptcy
The court and other institutions will get to know all of the items that you have at your disposal. This is something you must get prepared to face if you declare bankruptcy.
Will bankruptcy impact your credit score?
Your credit report will have the details if you declare bankruptcy. It will stay there for at least 10 years, therefore companies and everyone else will see it in your credit report. It will certainly affect it a lot due to the fact that companies and banks will not want to lend you money because you have already declared that you cannot pay in the past. This is not a very nice move, especially if you think like companies. You will certainly feel such action affect your credit score for a long term, and affect it in a very bad way.
Change how you deal with money, this is the best thing to do.
If you declare bankruptcy or not, you will have to change how you deal with money, especially if you even consider declaring bankruptcy. It is important that you change how much you spend and that you avoid getting loans again. A bankruptcy sign in your credit report is always a bad sign and it will stay there for 10 years. It will stain your report for 10 years whether you had a nice history or not. You would basically be erasing all the good you did with a single move. It is also very important for you to have a good credit report after bankruptcy as well, after all it will count in the end.
Have communities and other local communities that deal with money help you go through such a difficult moment of your life.
Bankruptcy should also be considered a new opportunity for you to start all over again. You do not need to see it as something so bad, after all you can have it as a new beginning for you. As long as you do not make the same mistake in the near future you will certainly have bankruptcy be something good for you. You will be able to see your family and the local community support you and will also be able to re-educate yourself regarding money. The better you see the phase, the better it will be for you and for your family to overcome such a hard time of your life. You will certainly be able to lead a much happier and safer life once you are able to get rid of your debt and have the opportunity to start all over again without making the very same mistakes.