WHAT IS BANKRUPTCY?
Bankruptcy is a state whereby a person, company or organization cannot pay any of its outstanding debts to its creditors. Usually, when a bankruptcy is declared, businesses tend to shut down. In other cases, the businesses will continue with its operations albeit with reduced payment to debtors.
As per personal bankruptcy, this happens when a person files for a petition for bankruptcy, as when an individual is not anymore able to pay off his or her debts. As the petition of bankruptcy is filed, the individual’s assets are then measured and evaluated. Some of the remaining assets then are used to paid for the outstanding debts of the petitioner, and preferences for payment are determined either by contract or the court. The debtor is then to be relieved of his or her debt obligations soon as the proceedings for bankruptcy are completed.
Filing a petition for bankruptcy may include a chapter in the Bankruptcy Code. It could either be Chapter 7 Bankruptcy or Chapter 13, depending on the personal circumstances of the petitioner. Filing for bankruptcy also implies having the need for a bankruptcy lawyer to assist the petitioner through the proceedings.
WHAT ARE THE COMMON CAUSES OF BANKRUPTCY?
Businesses often incur in bankruptcy when their liabilities outweigh their assets. This may also happen though a business has its assets, but are not liquidated. Therefore, leaving the business no additional value at all.
In cases of personal bankruptcy, this occurs when one is having huge amounts of unpaid debts with little or no income. This is usually brought about by people spending more than they are earning. Though in this case, filing a bankruptcy may mean being relived of one’s personal debts, this leaves one with a tarnished credit record, totally disallowing one to incur in loans in the future.
Other factors that can cause bankruptcy include suffering from adverse medical conditions that can cause one to overspend on medical treatments and drugs. Though this is already as bad as it is, it can get worse with filing a bankruptcy petition. While this may be the best relief for the time being, this may not be the best for one who looks forward to the years to come. Know that filing for bankruptcy leaves one with a bad credit standing– and what if you’ll need some funds for loan in the future?
It is also worth noting that unexpected disasters such as floods and earthquakes can cause one to file for bankruptcy especially if he did not have an insurance cover to compensate him for the damages. Contingencies often bring about causes to file for bankruptcy. As these are unexpected and unavoidable unfortunate events, both businesspersons and individuals may be unprepared for such contingencies, leaving them in dire straits after the same has passed.
Why it’s not wise to file for bankruptcy
If you’re swimming in debt and are unable to pay your current bills then you might be toying with the idea of filing for bankruptcy. While this might sound like a good idea, you should keep in mind that filing for bankruptcy has a dark side that may haunt you in the years to come.
Here are a few drawbacks that should make you think twice before filing for a bankruptcy claim.
- A bankruptcy claim will trash your credit ratings. This means that it will be very difficult for financial institutions to grant you financial assistance in the form of loans since your payback credibility will have been ruined. Your credit ratings are something that creditors look at when you try to obtain a loan from them. And the thing is, you obtain loans for urgent needs. Now, how can you address these urgent needs if you do not have the means to obtain the loans? Do not risk your future for a mere present contingency.
- You must be prepared to live with a tarnished credit record for a period of up to ten years. If you happen to own a business then this will not go down well with investors and it will slow down the company’s rate of progress. Ten years is such as long time; more especially if you are one who is engaged in any form of entrepreneurial pursuit. Know that this should not leave your investors and other clients with a good impression at all, and this can affect your business and personal finances too.
- While filing for bankruptcy might stop the confiscation of your assets by creditors it should be noted that it does not necessarily mean that most of your debts will be discharged. According to a chapter 13 bankruptcy, your debt might be restructured and you might end up paying higher interest rates that will make your loan payouts much higher. This is the fact that most people overlook when they think of bankruptcy. All they have in mind is the thought that it avoids them of paying off their debt– which is obviously, not the case all the time.
HOW CAN I AVOID BANKRUPTCY AND GET DEBT RELIEF?
Filing for bankruptcy should be sought out only as a last resort. Before that, clients need to try and negotiate with their creditors. However, negotiating with creditors is not quite easy for most people, most especially those that do not have much experience on the art of negotiation. The thing is that your creditors may be considerate too; depending on your approach. If you think that you cannot negotiate for the best terms in paying off your debt, it’s time to give us a call. Note that we are no Bankruptcy attorney; on the other hand, we make sure that you do not have to call for one.
Need someone to help you with the negotiation process? We can help you communicate with your creditors to get you the best possible debt settlement plan that will keep you from filing for bankruptcy.
There’s Help: Payday Debt Consolidation Debt Settlement Plan
Our team of experts will help you avoid the harsh penalties associated with bankruptcy. We do this by coming up with a financial plan that is tailored to your capacity to pay, and to the obligations you should be paying. We can provide you with the credit advice that you need to help you through your financial straits. We come up with alternatives to filing for bankruptcy; and we make sure that these alternatives are ones that are fit for you.
Our specialists will also work with you and propose a payment plan based on your income, the value of your assets and the amount owed. In short, we come up with a budget plan that you can follow through.
On top of that, our expert negotiators will help bring down the high interest rates and get you a suitable payment plan that will allow you to obtain debt relief within the shortest time period. We can help you with paying off your debt in six months to one year, or more, depending on the severity of your obligations.
So send us an inquiry today, and let us help you come up with solutions to paying off all your debts.