Bankruptcy

There are many things that people don’t like to be involved in. No one wants to be called dishonest, underachieved or in any way be seen as a failure in their life. For this reason there is one specific thing that really makes people feel terrified above anything else and that is the word bankruptcy. Everyone associates this word with complete failure and this is why people will do anything they can to avoid it, but is it really that bad? In this article we are going to give you the most important information about what bankruptcy really means and why you shouldn’t be so afraid of it.

Let’s keep thing simple here and make it easy to explain everything. Bankruptcy is simply a way to deal with your debt. If you are in over your head with debt and you can’t seem to make ends meet every month, the most logical step you can stake is to declare bankruptcy. This will allow you to get help from the government and this allows the consumer to basically have the same rights as the creditors have. This is the main reason why you should never feel bad about the idea of declaring yourself bankrupt.

Many successful people have been there

You might think that because you have worked too hard for the things you have, you should never allow yourself to go bankrupt publicly because no one would ever want to work with you again. This is very far from the truth because many successful people in the past had to declare bankruptcy at some point on their lives and then they made a comeback. This is a problem that millions of people face and you should not be ashamed at all. Let’s look at some successful, powerful and famous people who had to deal with being bankrupt at some point in their lives.

Henry Ford:

Believe it or not, this successful business man who dedicated his life to the creation of automobiles had to declare bankruptcy in order to start over with the business because of mistakes that had been made in the first attempts to create quality cars and taking way too much time to manufacture a few. Later on he had massive success with his company.

Walt Disney:

This amazing man who was responsible for the creation of some of the most famous cartoons in the world was also victim of financial troubles. His original studio had some problems due to bad business relationships and it went bankrupt in 1923. He then went on to create this new character that we have now come to know as the most famous mouse in the world and very likely the most famous cartoon as well.

Burt Reynolds:

This Hollywood actor also had struggles that led him to bankruptcy because he never took care of his money and thought his career would never suffer any downtime. He was obviously wrong about this and he had to declare himself bankrupt and then was able to bounce back.

The idea with telling you about these people and the struggles they had to go through is just to show you that bankruptcy is not something that you should be scared of and it doesn’t mean you will never be able to have success again. The examples we gave you are just some of the many people who are now successful but had to experience this bump on the road to get there. People need to stop putting bad connotations to it and many individuals will be able to benefit from the process without feeling ashamed or like they have given up on their search for financial stability.

Types of bankruptcy

Once you have established that your best option is to go bankrupt, you need to analyze what the options you have and which one is going to work better for you. This means that you have to get all your numbers and assets in order just to see what the best decision will be. First we should take a good look at the different kinds of bankruptcy. The choice you make will depend on the type of debt you have, the amount of income you make and the properties you own. There are two major types of consumer bankruptcy and they can both be very common. You have chapter 7 and chapter 13 as your main options.

Chapter 7

chapter 7 bankruptcyChapter 7 is usually the best choice for people with low income who have a lot of insecure debt. In this chapter the person is allowed to have most of their unsecured debts discharged. An unsecure debt is anything that is not attached to any physical collateral. This can include your medical bills and your credit card debt. Once you are discharged from those debts, you cannot be charged for that money by the collectors or reported as delinquent either. You can also liquidate property to pay for some of your debts and you still have to pay for secured debts like your car loans or mortgages.

You will also have several options to choose from when you want to manage your secured debts. You can go for a reaffirmation. This means that you agree to continue to pay your debts. You can go for a redemption, which means that you pay a flat amount of money and you get to keep the property or you can go for the surrender of the property and your debt will become unsecured and dischargeable. Just remember that chapter 7 bankruptcy is better fitted for people with a lot of unsecured debt and with little to no property of value.

Chapter 13

chapter 13 bankruptcyThe chapter 13 option is more suitable for those who have good income and certain types of property. This option gives the person more time to catch up on past due amounts that need to paid and also allows you to maintain your current bills. Your current bills will be based on your current income. This chapter gives priority to secured debt and will halo you save your home, vehicles and other secured property you might own. You will be asked to pay for unsecured debts such a credit card bills and medical bills only after you are able to pay for the secured debt. The good thing is that once a person pays of the secured debt they will have their unsecured debt discharged.

Both of these options are very different and this is why people need to take a very close look at their assets and their income before they make their decision. The good thing is that there are many attorneys that specialize in bankruptcy, so you should feel safe about the fact that you will be able to find a professional who is going to help you in your situation. People file for bankruptcy for many different reasons. Some do it because of a divorce, other because they lost their jobs and in some cases due to an illness. In any case, you should know that this is a very common situation and there really is nothing to be ashamed of.

Things to avoid

There are some very important things that you should make sure that you avoid when you file for bankruptcy. We are going to mention the most critical ones and then you will be informed and ready to get started with your decisions. Remember that some of the following points can be more important than other depending on your case, but they are generally the best advice for this kind of cases.

  • Do not settle your debt with your creditors. This one is very important because you may cause yourself additional debt payments that could have been cleared with your bankruptcy. Avoid getting into any sort of agreements with any entities when you are going to file for bankruptcy.
  • Never pay any family debt when you are about to file for bankruptcy. This could cause serious problems for you because the trustee could bring up a lawsuit against your family members to recover that money from them.
  • Never transfer property out of your name because the court could see this as an attempt to frustrate the process of your payment. This is very important advice because it can affect your possibilities.
  • The single most important thing that you need to do is to avoid keeping any kind of information from your attorney. It doesn’t matter how bad something might seem, you need to tell your attorney everything regarding your case so that they can cover all bases before you go into bankruptcy.

If you follow all of this advice you will have a much easier time handling your case and your situation. There is no point in making
things harder for yourself and this is why we are sharing this knowledge with you. The idea is to help you realize that bankruptcy is a very important thing that you shouldn’t take as something bad, but instead one of the best ways to settle your debt and be able to recover from your financial situation.

There are other things that you should also keep in mind when you file for bankruptcy but they will all depend on the kind of case you are going to be presenting to your accountant and your lawyer before you actually get started with the process. The best way to prepare yourself for this kind of issues is to check in detail all the things that you might have missed out. Everything you own that is on your name as well as any credit card payments or property payments you might be making. The best way to be able to have a good process of bankruptcy is to be as clear about what you have and what you owe as you can.

Conclusion

Now that you know exactly what bankruptcy can mean to you and your economy, you should be able to decide if this is the right move for you. There is nothing to be ashamed of when you file for bankruptcy because it means that you want to do things properly in order to find your way out of debt and recover from your current situation so that you can start again without these setbacks.

There are so many reasons why people file for bankruptcy and many of them are completely out of the control of the person. This is why you should never feel in any way ashamed of going through this process because you will actually be doing the right thing as a citizen when you declare yourself bankrupt.

Of you need any additional information it’s always a good idea to consult a lawyer so that they can review your case and tell you what the best course of action would be. Just remember that the crucial thing is for you to be completely clear of what your situation is before you make any decision prior to the possibility of filing for bankruptcy.