Important Knowledge Pertaining To Claiming Bankruptcy

Contrary to the belief of some people, filing for bankruptcy is not a simple process

. Moreover, claiming bankruptcy could be hard on you emotionally and mentally.

You can talk to the lenders, whoever they are and request for a debt workout program. This program is an agreement between you and the lender. Based on your discussion with the lender, you may be given a temporary reduction in interest rate or extension of loan terms.

If your situation is not too bad, you might be asked to settle the outstanding amount of money in installments within a few years time. Hence, the information and documents that you submit to court is very vital. You have to make sure that the information is precise and proper.

Be ready to give details of your assets, liabilities and household income. Under normal circumstances, filing for bankruptcy would not affect your retirement account. Nevertheless, you have to submit records of your retirement account to court. Apart from submitting details about your income tax and earnings, you also have to hand over details of whatever insurance policy you possess.

For those who have student loan debts, bear in mind that declaring bankruptcy would not free you from such a debt. You would still have to pay for the loan. Student loans are extremely difficult to escape unless you claim undue hardship. Even then, you would have to make a proper case of it in the bankruptcy court.

The debt workout program is actually an understanding between you and your creditors. A temporary reduction of interest rate or an extension of loan terms could be the result of the discussion with your lenders. Another alternative is to apply for a debt consolidation loan. Even though this loan is usually given through a debt management or credit-counseling program, it might not be a better option.

Check the details before you simply agree to the terms ad conditions. The company settles all your outstanding amount of money and requests you to pay a lower monthly installment instead. During the beginning stages, the interest rate might be low. However, as time goes by, the interest charges might be higher.

However, this does not mean that you should rush and file for bankruptcy just to escape from paying your debts. Bankruptcy should be one of the last resorts. If you feel emotionally and mentally tortured with no other possible alternative to settle, then, consider claiming bankruptcy.

by: Enrique Castillano

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