If you find yourself in deep debt trouble, you might look at bankruptcy as the only possible solution. There are two types of bankruptcy options if you decide to file a petition to become bankrupt: one allows creditors to relinquish your assets and liquidated to pay for your debt, while the other allows you to re-negotiate a new payment plan. Either way, they could have positive and negative impacts to your credit history. It is therefore important to ponder on it carefully to ensure you make the right choice.
For beginners about bankruptcy solutions, here are some of the most common questions asked about bankruptcy and their corresponding answers:
I filed for bankruptcy – what next?
As soon as you file a petition to become bankrupt, you will have to surrender all of your assets (if you chose a Chapter 7 Bankruptcy) to the creditors. They will liquidate those assets to pay for your outstanding debts. This means that the debt collection agency will also stop calling you or harassing you about your debts. You are protected by law from any creditors who will attempt to make you pay for your debt. If you are dealing with multiple creditors, the amount liquidated from your assets will be divided amongst them. To get the protection from this type of bankruptcy filing, you must be able to prove incapacity to pay your outstanding debt. Most creditors would be happy to get any money out of your assets as compared to getting none at all.
In a Chapter 13 bankruptcy, you will discuss a new payment schedule. In some cases, your payments for the succeeding months will be waived and postponed at a later payment schedule.
Is there any benefit to filing for bankruptcy?
If you look at it in a larger scale, there is no advantage to filing for bankruptcy. It is a negative point in your credit history. The most obvious advantage when you file a petition to become bankrupt is that you can get relief from debt collectors and creditors with regards to your debt payments. If you are faced with an unhealthy level of pressure from them to settle the payments (but do not have the cash to do so), you can settle the problem via bankruptcy once and for all.
Will bankruptcy ruin my credit rating?
It depends on what you do after you filed for bankruptcy. However, since the bankruptcy will be reflected on your credit history, it is very likely that there will be negative implications to your credit rating.
What can’t bankruptcy do for me?
When you get bankruptcy debt administrator protection, debt collectors and creditors will no longer take any subsequent actions against you in terms of debt collection. This is one advantage to bankruptcy. However, it will not guarantee that your finances will improve. You should view bankruptcy like any other debt solution tool. You have to be smart and methodical in how you plan your finances from here on out to avoid ending up in a debt trap once more. Read more at Debt Helpline