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Salient Points About Personal Bankruptcy

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In these financially difficult times, many of us have difficulty paying our bills and debts, and it turns

even harder after a personal sickness or if someone in the family becomes sick, loss of employment, or

simply excessive spending. For some individuals, these financial obligations can be so overwhelming that

it controls their life, and they at some point will be left with only one option - declaring bankruptcy.

Personal bankruptcy is regarded as the last measure with regards to managing one's debt because its

impact is long-lasting as it is far-reaching. People who declare themselves bankrupt get a discharge which

says they do not have to repay certain debts, which could offer you a new beginning. Sadly, your

bankruptcy court records will stay on your credit report for 10 years. People who have bankruptcy records

will find it hard to obtain credit, life insurance, auto and home loans, and in some instances even have a

job.

Those who declare bankruptcy can choose between two

kinds, namely, Chapter 13 and Chapter 7. Chapter

thirteen enables those who have a steady income to

retain ownership of their property, such as a mortgaged

house or car, which they may otherwise lose through

straight bankruptcy. Most of the time, the repayment

plan would span a 3 to 5 year period, and once you

have made all the repayment you will be handed

discharge of your debts. Chapter 7 also referred to as

straight bankruptcy, will cause liquidation of all non-

exempt properties. Your property might be offered to

an official appointed by the court, or handed over your

creditors.

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Given the impact that bankruptcy can have on one’s life, it is crucial that you take control of your

finances to prevent it from happening. For starters, you should make it a habit to make a budget. You can

do this by listing your family's income from all sources, then recording your monthly expenses. By using

this method, you can keep track of your spending patterns, recognize necessary expenses, and know how

to prioritize your spending.

Also try 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 feasible for you. Mortgage companies

can even suspend your payments temporarily if they

believe the said difficulty in paying is temporary.

Lastly, get help from professionals. There are a lot

of organizations that provide credit advice at no cost

to you, or for a small price, and it is not a remote

possibility to locate one in your area.