Spotlight On Effects Of Bankruptcy

Mar 14th, 2014 | By | Category: Debt

If your financial situation is at a stage where you’re considering bankruptcy, you need to sit here and do a detailed analysis of your financial situation instead of jumping into something like bankruptcy that may be AN answer but in all probability, isn’t the best answer for your situation.

Bankruptcy law has changed enormously in past few years, and it is no more the simple do-it-yourself process that it once was. In fact, these days you need the adoption of the federal bankruptcy judge so as to be approved to file. That’s right, just because YOU think it’s the answer doesn’t mean you’ll be in a position to file just because you want to.

For a closer look at corporate bankruptcy and the effect it can have on average employees, Ed Gordon is joined by Rania Sedhom, a labor attorney and pensions expert at the New York City firm of Meyer, Suozzi, English & Klein, and Michael Reed, a bankruptcy specialist and partner at the Philadelphia firm of Pepper Hamilton. He is also the first African-American president of the Pennsylvania Bar Association.


Things To Avoid Saying To Someone Who Has Just Filed For Bankruptcy :’ Was There Anything Else You Could Do Besides Bankruptcy? ‘ Most people filing for bankruptcy have exhausted all other means before taking such a drastic step. In this current economic crunch, people are refinancing their homes, draining their pension and retirement funds and taking personal loans from relatives and friends to satisfy their monthly expenses and avoid bankruptcy. Undoubtedly your loved one filing for bankruptcy has already tapped into any money available to them and still found themselves in need of bankruptcy protection. This question assumes that the person filing for bankruptcy didn’t pursue any and all available sources before making this most important and personal decision.

Interesting, isn’t it?

One of the big reasons for this situation is that people were filing for bankruptcy left and right, just because it was the first thought that popped into their heads when they get into deep financial sneakers. The problem with that, outside of clogging up a judicial system that is already overloaded to the break point, is that these people didn’t take the time to thoroughly investigate other financial options that were available to them, and indeed may have been much better for them overall, without all the long run negative effects that bankruptcy brings to you as a consumer.

Heading Down The Effects Of Bankruptcy Rabbit Hole

Things To Avoid Saying To Someone Who Has Just Filed For Bankruptcy :’ What Did You Do With All Your Money?’ Not only is this question extremely personal and inappropriate, it also means that the person filing for bankruptcy simply mismanaged their money with no regard for their financial responsibilities. The truth is that the majority people that file for personal bankruptcy are hard working people with a will to fulfill all their financial responsibilities, but simply can’t. Many people filing for bankruptcy have lost income due to medical issues, unemployment, or rising costs in food, housing and gas without a comparable rise in income.

FAQ’s: What effects does bankruptcy have on someone for the rest of their life?
Someone I know is filing for bankruptcy. I was wondering if there were any effects that bankruptcy would have on her as far as credit. Does bankruptcy go on any kind of personal record? I'm just wondering if she'll always have to worry that filing bankruptcy will effect her credit permanently or any other issues throughout her life?

  • Well, the first thing to be concerned with is whether any of your property is going to be seized for sale at auction during the liquidation process, but seeing as how most people filing for BK these days own basically nothing, that shouldn't be an issue. And there are the effect to their credit report, but again here, most people filing are in genuine financial distress, and aren't particularly keen on taking on debt ever again, so the actual credit implications shouldn't be much of a concern. However, many employers and landlords check credit reports, so it can be an impediment when finding a job or place to rent. But on the other side of that, there have been a huge surge in bankruptcy filings, and we're only at the tip of the iceberg; chapter 7 and 13 filings have risen to nearly 1 million this year. That's a 28% rise over 2007 and the year ain't even over. Over 5 million families could file next year, and that's a very conservative estimate. It would terrify you to know how many of the households in the USA are insolvent. While that doesn't bode well for the US economy, it does make people who have filed more attractive employees/lessees in relative terms – what, are companies just going to refuse to hire what could be up to 30% of the workforce once the depression is over? I don't think so.

  • It comes off the credit report in ten years. However, sometimes you "may" be asked on an application if you have ever filed for BK. Filing BK will not destroy your credit for life…The initial effects will be bad for about two years…after that…your credit score will start to go up. In terms of catastrophic effects…filing for BK "might" effect you if you are in certain professions..ie accounting/finance…like being a CPA (filing for BK when you are a CPA would not look good)..Same issue with being a certified financial planner or stock broker. If you work for the government and need a Top Secret clearance…filing BK might be an obstacle…..In the vast majority of cases…filing for BK should not be an issue.

  • Pursuant to 15 U.S.C.A. ยง 1681(c): Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information: (1) Cases under Title 11 or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years. So, the bankruptcy will not affect her credit permanently. Federal law requires that the bankruptcy not be included in any credit report 10 years after the bankruptcy was filed.


  • Things To Avoid Saying To Someone Who Has Just Filed For Bankruptcy :’ Was There Anything Else You Could Do Besides Bankruptcy? ‘ Most people filing for bankruptcy have exhausted all other means before taking such a drastic step. In this current economic crunch, people are refinancing their homes, draining their pension and retirement funds and taking personal loans from relatives and friends to satisfy their monthly expenses and avoid bankruptcy. Undoubtedly your loved one filing for bankruptcy has already tapped into any money available to them and still found themselves in need of bankruptcy protection. This question assumes that the person filing for bankruptcy didn’t pursue any and all available sources before making this most important and personal decision.

    In addition, there are multiple chapters and you need to be able to identify, founded on a mountain of criteria, which one’s best for you and which chapter the judge will approve you for. If your financial situation isn’t submitted to the judge so that the approval process is almost guaranteed, again you take the risk of not being approved to file, forgetting to include some information that may have been pertinent, and having wasted several weeks worth of your time, all the while your financial situation is going from bad to worse.

    For personal bankruptcy, you have two basic options. This is either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. These chapters or sections of bankruptcy law have entirely different outcomes and vastly different meanings for you, so in addition to determining which one you should file, you should also consider which one you’re likely to be APPROVED to file and how to submit your case in that light to the judge.

    Regardless of the nature of bankruptcy you file, it will remain on your credit history for 7 years in the event of chapter 13 and 10 years for chapter 7 bankruptcy. This will make it very difficult, or even impossible, to gain any credit during that time. Even though chapter 13 bankruptcy is looked on in a better light to chapter 7, the typical consumer will always have serious problems gaining any kind of credit during this period.

    Also be very aware of the kinds of financial obligations that make up your overall debt load. Are they loan payments, credit cards, or other things, or even a mixture of all of those? The reason for knowing what types of debt make up your overloaded financial picture is as there are certain kinds of debt that cannot be eliminated by ANY chapter or form of bankruptcy, so if that’s the case with you, then even after you complete your filing, those debts will still be like a noose around your neck because they’ll not have been erased.

    Bankruptcy is generally filed under Chapter 7 and Chapter 13. Though Chapter 7 can discharge a large amount of debt but in most cases it will force a liquidation of the whole of the assets of individuals declaring the bankruptcy. If the declaration is filed under Chapter 13, the payer is given some time and a considerable part of the debt is lowered making it easy for him/her to get rid of his debts.

    Most people don’t want to have a bankruptcy lawyer involved. For one thing, being in this kind of financial situation is embarrassing and demeaning, and people see it as an indication of personal failure. You cannot allow your emotions to get involved at this time, you have much bigger fish to fry. A qualified bankruptcy lawyer knows the laws, both at the federal plan as well as how they apply in your state, and can make recommendations and provide bankruptcy advice as you sort through this. Most importantly, they can let you see what other options you may have and how those are a benefit. People who’ve used a bankruptcy lawyer noted that the time and money they saved as a consequence were an order of magnitude more money than they’d have wasted if they had done it themselves.

    The bottom line is to find out what your options are, and to do that, you need a bankruptcy evaluation from a qualified bankruptcy attorney. If you need a plumber, you do not call an electrician. If you need landscaping, you do not call a roofer. By the same nominal, get the expert involved who can provide the bankruptcy advice you need.

    Tags:

    Comments are closed.