subject: Dealing with Personal Bankruptcy [print this page] Dealing with Personal Bankruptcy Dealing with Personal Bankruptcy
Filing for personal bankruptcy is a life altering step which can change the way you live for the rest of your life. It is usually the last step resorted to when all other alternatives fail and there is no hope for respite from acute financial distress. If done at the right time, it can help you clear off your debts and start life on a fresh note.
Individuals can file for bankruptcy under Chapter 7 or Chapter 13 according to U.S bankruptcy laws. Chapter 7 involves liquidating all assets to pay off their creditors. Chapter 13 involves registering a specific plan with the court to pay off the creditors within a precise time frame from the sources of income that you have revealed to the courts.
The new laws passed in 2005, makes filing for personal bankruptcy difficult and seemingly more complicated than before for an individual. That can perhaps explain the increase in number of cases filed under Chapter 13 by individuals over the last few years. This Chapter requires the affected individual to provide proof of income as the law revolves on the capacity of the individual to repay the debts over the scheduled period. If the individual fails to pay as per the pre-decided plan, there is a chance that the case might be dismissed and the bankruptcy process will have to be started all over again.
Filing for personal bankruptcy no doubt gives the affected individual the opportunity to start life afresh. However, credit bureaus that keeps record of all bankruptcy details will keep prevent the individual from carrying out any financial transaction at normal rates of interest. There are some banks that help individuals build up their credit ratings on some initial security payment. This can help such individuals accelerate the process of normalization of credit situation.
Under the new U.S laws, before an individual files for personal bankruptcy, he or she is required to undergo credit counseling at least six months before they actually file for bankruptcy.Bankruptcy claim is a relatively simple process which can be done professionally with the help of experts in the field. That obviously means that the services of a licensed lawyer are mandatory to file for bankruptcy.
Filing for personal bankruptcy is a huge decision that one has to take at the right time when faced with a situation of immense financial distress. You must view such developments in your life in the right perspective so that they are put behind in the past and you can look ahead to the future afresh.
