Bankruptcy: Caught in a Rat Race

Bankruptcy: Caught in a Rat Race

Bankruptcy: Caught in a Rat Race

Get a paper, divide it into two, and make an inventory of all your assets and liabilities. Studies show that the middle class are caught in a rat race, meaning they continue to amass liabilities, but their assets remain constant.

Assets refer to all ownerships and property. This includes bank accounts, monetary savings, automobiles, and houses. Assets are all material things with an economic value. Assets also refer to legal rights. For instance, business goodwill, stock options, and the right to legal proceedings are all assets. On the other hand, liabilities are debts and credits from people and institutions. These include credit cards, cash advances, and debts from families and friends. Basically, everybody has their own set of assets and liabilities.

If you subtract the value of your liabilities from material assets and you get a zero or negative difference, it means you're in a rat race trap. Rat race trap is a term for economic constancy. This can be represented by credit card debts. You pay monthly dues, but you barely pay your total debt. Your monthly dues go to credit interest rates. Therefore, your credit remains constant. When you increase credit account, you increase interest rate and value of total debt, but the value of your assets does not change. Your individual financial flow becomes stagnant.

Unresolved economic stagnancy leads to bankruptcy. Being bankrupt means, you are unable to pay your credit accounts. Your present monthly income is barely enough for your daily needs. You cannot dole out money for added expenses. Massive credit accounts, cash advances, and personal debts lead to bankruptcy. In Los Angeles, bankruptcy is one of the major business problems. Lawyers on bankruptcy Los Angeles advise filing of legal bankruptcy for payment of debts.

There are four modes of payment in bankruptcy Los Angeles. One of these is the non-exempt asset payment, wherein a debtor can pay liabilities from existing assets. There are two types of material assets: exempt and non-exempt assets. Exempt assets are daily essential needs, while non-exempt assets are other sources of income (such as business ownership). Non-exempt assets are turned over to the creditor.

Laws on bankruptcy Los Angeles are stated in the federal bankruptcy law. These laws help individuals escape the rat race. More importantly, they helps pay substantial liabilities by enabling debtors to pay debts. At the same time, debtors can start anew with their remaining exempt assets.

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