Consequences Of Bankruptcy – Some Major Factors

Jan 29th, 2014 | By | Category: Info

Declaring bankruptcy is a serious issue and should be approached thoughtfully and carefully. It is imperative that you research and understand all facets of the bankruptcy process, including possible outcomes. This article provides a very brief overview of the bankruptcy and its pros and cons.

As it becomes more and more difficult to make ends meet, many people begin to believe that bankruptcy may serve as a good idea. Before jumping into a decision like this, though, you should research what bankruptcy really is.

Between 200,000 and one million American consumers are estimated to be unable to afford the cost of filing for Chapter 7 bankruptcy, according to new research released by the National Bureau of Economic Research. The research also reported the average cost for filing Chapter 7 as more than $1,500, including attorney’s fees. The court costs associated with filing a petition account for about $300 of that total. The cost of bankruptcy rose sharply following passage of the 2005 Bankruptcy Abuse Prevention …

When you file a legal proceeding to have your debt discharged (Chapter 7) or to reorganize your finances (Chapter 13), you have filed a bankruptcy proceeding. A bankruptcy filing is usually done voluntarily and because the debtor is having trouble paying his creditors.

Facts, Tips and Tricks!

The main advantage to filing bankruptcy is that the individual will be able to start fresh. The bankruptcy, once completed, will permit the debtor to take a deep breath and start afresh. There will be no more harassing phone calls and letters and the debtor, hopefully, at this point, will be able to live within his means.

A BRO is an expansion of a Bankruptcy Order that can be imposed on the debtor at the termination of the bankruptcy terms. This is normally one year. A BRO is issued if the Official Receiver deems that the debtor has been irresponsible during the terms of their bankruptcy.

QUESTION: What are the consequences of filing for bankruptcy?
I recently found out that when I was about 5, my parents had to file for bankruptcy. My parents are now divorced. Since I am only 15, I don't fully understand the concept of bankruptcy. What are the consequences of filing for bankruptcy? What are the benefits? And, What are the benefits of not filing for bankruptcy?

  • Depending on what chapter the bankruptcy was filed under, I'm assuming Chapter 7, liquidation, the bankruptcy court appoints a trustee to break up the assets owned by your parents and distribute it to creditors. Aside from essential assets such as tools of the trade, home, etc. you lose everything to pay off any delinquencies. There are almost no benefits to bankruptcy as it ruins your credit score and makes it almost impossible to receive a loan in the future. Bankruptcy is only a last resort, if all other choices have been exhausted. There are much more implications to bankruptcy I probably left out, but that's the general stuff.

  • if you find yourself owing more than the value of all your assets you may file bankruptcy to seek protection from creditors. in chapter 7 bankruptcy, all your assets are seized by the trustee and liquidated and the proceeds distributed to creditors according to a complicated formula. you are immediately relieved of all your debt just like that but your credit rating is in the sewer. you will be unable to obtain credit cards, mortgages, or any kind of financial credit for ten years. and even after that the bankruptcy will hand over your head in all your financial dealings.

  • Filing for bankruptcy is announcing that you do not have enough money to pay off your loans, bills, etc. Your debt is erased, but you are stuck with HORRIBLE credit. And bad credit will lead to a very difficult life when you're trying to make big purchases.

  • There are, however, some misconceptions related to bankruptcy. Bankruptcy shouldn’t cause you to lose your job nor your social security benefits, for starters. Also, though your credit score most certainly will take a huge hit, it can be repaired.

    The major issue with declaring bankruptcy is that your credit score will be dramatically affected and will instantly plummet hundreds of points. Because of this, you’ll probably be denied for all credit products for many years, possibly up to ten years.

    How will this affect my credit rating? A bankruptcy filing will remain on your credit report for up to 10 years. It is possible to begin repairing credit after filing. However, it does have a significant negative affect on your capacity to get future credit.

    You may lose a number of your assets, based on the chapter of bankruptcy that you file. It should be noted though that some assets are exempt. When you meet with your bankruptcy attorney, you should discuss the various types of bankruptcy and the potential consequences.

    Additionally, the cost involved needs to be considered. There is a filing fee for filing the case with the Bankruptcy Court as well as attorney’s fees which can range from $1, 000 to more than $2, 000. Therefore, when the total debt is only a few thousand dollars, it may be best to just deal with your creditors than to file bankruptcy.

    If you’re considering bankruptcy, you should obtain professional advice from a bankruptcy attorney prior to moving forward. A bankruptcy attorney can explain the different chapters of bankruptcy and he’ll be able to recommend which one you should file.


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