Things You Should Know About Bankruptcy

Bankruptcy is one word that no person wants to hear but a reality some have to face

. Depending on how troubled your financial situation is, this can be a lifestyle changing experience. Therefore it is always a good idea to ponder every single type of relief available before choosing this option.

Here we will list some of the things that everyone must know about this option. If you are faced with this difficult prospect or would like to know about what all it actually entails, the following points should help you.

1.Bankruptcy Stays on Your Credit History for Ten Years

Filing for bankruptcy isnt as easy as it used to be. New requirements and conditions make it a difficult option to choose and even more difficult to sustain. One such condition is that once an application is approved, it will stay on a companys or individuals credit for ten years. During that time, they will be unable to receive any loans or any type of credit. Furthermore they cannot choose to conceal it when asked when filling out any type of application. Attempting to hide it can result in severe penalties.

2.Its Harder to File Nowadays

Due to the numerous benefits it provides, new laws have been implemented over the years in order to make it difficult for people to seek this form of debt relief, case in point, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The clauses in this Act add strict requirements that consumers must meet and maintain in order to qualify. The main reason for this is to prevent people from abusing this powerful feature and seek out other viable solutions to their debt problems.

3.Not Available for Everyone

Another big misconception about this form of debt relief is that it is available for any individual who is in debt and wants to get rid of it. Wrong. Again, there are specific set of requirements that individuals or businesses must meet in order to qualify and even then the success of it being approved is not guaranteed.

4.Bankruptcy Does Not Eliminate all Debt

This is another very common misconception that if approved, bankruptcy will wipe out all debt from an individuals credit history. That is far from the truth. Companies and individuals are still liable for any taxes they owe, loans they have taken out and child support.

5.Keep it as the Last Option

Bankruptcy should always be used as a last option. It is not a joy ride. Its not a free ticket to financial freedom or a guaranteed way of riding yourself of all your obligations. There are heavy penalties and limitations involved that the receiving party must adhere to. It is always best to seek out other effective solutions such as debt settlement. Another option is to contact the creditors directly and work with them on a payment plan one of one.

Due to its complexity and severity, careful consideration must be given to this option. Attending credit counseling sessions or sitting down with a certified lawyer to discuss your options would be one way to start things off.

by: harmonsmith

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