The Truth About Bankruptcy

With today's difficult times, many are suffering from financial difficulties

. In fact, some people barely get by with their daily needs. Moreover, there are a lot of people who are in dire need, yet there are no possible means to address the needs. Practically nobody is exempted from the global economic crisis that the world is experiencing nowadays. Thus, most people resort to loans and debts in order to survive.

There is actually nothing wrong with making loans and having debts. However, when there are more debts than assets, real trouble comes in. According to financial advisers, it is never wise to borrow money that you cannot pay for. In other words, if you do not have the means to pay for a loan or a debt, do not make that loan at all. However, in real life, this is not very applicable. The common notion of most people is to temporarily solve their monetary problems through loans, and look for some other means of paying the loan later.

The problem worsens as people seek for other loans in order to pay an existing loan. After all, how could he possibly pay for the new loan when he could not even pay for the previous one? Moreover, how could he deal with the payment deadlines and the interest rates? This is definitely a very depressing situation; one might think there is no way out. However, financial experts have devised various solutions to serious debt problems. If these solutions fail though, the last resort is bankruptcy.

Bankruptcy occurs when the liabilities are more than the assets. This means that there is no way for a person to meet his financial obligations, making him financially insolvent which could be a ground for relieving him of his outstanding debts. While most debts can be discharged upon declaration of bankruptcy though, there are some restrictions on obtaining credit and working in particular professions. Moreover, an Official Retriever is appointed to investigate the causes of bankruptcy and validate its legitimacy.

For people who think that bankruptcy is the best option because it relieves them from all financial obligations, they are wrong. Although it is true that all outstanding debts will be disregarded, all personal assets of the debtor will be sold from which the proceeds will be divided accordingly as payments for existing debts and loans.

Furthermore, the person is excluded from occupations and professions. In worst scenarios, the person might even be deprived of promotion prospects because of bankruptcy. Thus, while bankruptcy may seem the ultimate resort to debt problems, all financial gurus would certainly agree that this can only be considered as a last option. If there are still other ways of paying debts other than declaring bankruptcy, then definitely go for these solutions instead.

by: Gen Wright

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