22 Jan The Long Lasting Effects Of Filing For Bankruptcy
The word bankruptcy is scary and has many negative connotations. They might be the ideal way out if you faced with insurmountable debt. In fact if you have faced severe economic distress and are in a situation where you can lose your home and all your valuable assets are in danger of being forfeit. Although the new rules for declaring bankruptcy are more stringent than before, there are good attorneys who will be able to bail you out. Positive debt restructuring and strict repayment conditions may actually help you get life back in perspective.
What exactly is bankruptcy?
The word bankruptcy denotes in legal parlance that the individual is not able to repay, within certain reason, the various debts accumulated by him and is seeking legal succor for financial relief. The individual petitions the judicial system to take over their finances and direct them to the best possible way to overcome the situation. Bankruptcy can only be declared if the debts are in a certain limit in both secured and unsecured loans.
Once your petition is accepted the court appoints a debt management specialist. The creditors cannot harass you for further payments outside this system. The debts are restructured and interest percentages are reworked according to your present situation. The creditors will approve of the conditions that are meted out and you are on your way to a major overhaul in the way you act financially. In most cases the creditors are paid their monthly dues directly from your pay check.
What are the lasting effects of bankruptcy in general?
You can file for Chapter 7 or 13 bankruptcies as your situation warrants. The ramifications of a bankruptcy are manifold and far reaching. They might cramp your lifestyle for a long time. While discharging your bankruptcy, the limits on your credit are severely limited. Even after the bankruptcy is discharged the credit limits are limited for some years. You might find that your credit rating is very low and creditors will be hesitant in providing credit to you.
It might take a lot of diligence and discipline to build your credit ratings to optimal levels and know how bankruptcy works. It might take 6 months to 2 years to become credit worthy again. Even then the initial months may see that the interest rates that you are offered are higher and the compliance levels much higher.