Filing for bankruptcy comes after a great deal of events
. Some of them may be unforeseeable and often end snowballing into a bad situation. A bankruptcy situation can arise not only from frivolous spending and lack of financial management. It can also happen where there are several unbudgeted for expenses. These can be illnesses, natural disasters, unemployment, divorce settlements etc.
There is a lot of information available on personal bankruptcy. Not all of it is always accurate. There are some creditors who may try to convince you that you cannot apply for bankruptcy. This is not true. According to the 2005 amendment, any debtor can file for bankruptcy. It falls on the state to determine the extent and the possibility of asset liquidation or debt reorganization.
It is also thought that filing for bankruptcy is degrading. It can affect your personal life no doubt, but how much it affects you can be controlled only by you. Filing for bankruptcy may actually rid you of some social stigma and give you peace of mind. Bankruptcy provides you a chance to start from the beginning on a clear slate.
It is also false that you can file for bankruptcy only once. There is only partial truth in this. A person who has filed for liquidation of assets once cannot do it for a period of 8 years. After this too, you will have to file for bankruptcy under a different category and this will be subject to the law of the state.
There is also the misconception that personal bankruptcy means that you lose everything that you own and that makes you a pauper. This is utterly false. The idea behind bankruptcy is to allow you the time needed to repay your debts without losing all that you have. Filing for bankruptcy is a tedious process is a long held opinion. There is no doubt that the laws involved can get confusing. All you will need in such a situation is a good financial consultant or a credit lawyer to help you better understand what you are going to do.
Filing for bankruptcy is not an easy decision to make. That is what makes it necessary for you to know all the facts involved. If you are considering bankruptcy, do so after educating yourself well on the process and all it involves.