subject: Learning About Bankruptcy And How It Can Help You [print this page] You have been overspending for the last few years. Now, you have nothing to pay back for all the debts you have accumulated. Selling off your house is also not enough to solve the problem. What to do? Most people have no choice for but to file for bankruptcy.
But, there are some points about being bankrupt. You should know about them.
When you are bankrupt, some of your debts can be eliminated or discharged. Is this a good thing? Yes, it is. Debts that can be cancelled out are credit card, medical, car, utilities and rent.
People that are affected can also clear their unsecured debts. What is an unsecured debt? A secured debt is one where the creditor (the party you owe money to) has the right to collect by seizing and selling certain assets of the debtor (you) if there are no payments made. These also include home mortgage or car loans. Other than these two types, the rest are unsecured debts in which you do not have to pay back for.
On the other hand, there are debts that cannot e cancelled. These include child support, alimony, student loans, taxes and court-ordered damages. Therefore, if your debts belong to the right category, filing for bankruptcy is the right thing to do.
Also, count your ratio of consumer debt to annual income. If it exceeds a level of 25%, you are best left to file for bankruptcy.
Think of it as a reset switch. You are able to start everything over again from scratch. Now you can steer towards real financial goals that will benefit you in the long run. You may require a certain amount of years to pay off the non-cancellable debts.
But starting sooner is better than starting late. Some people just worry far too long before filing for a bankruptcy, when they should have done so months ago. Most people live in a paranoid and scared manner because they are overridden by debts. This is when going bankrupt is the right decision.
Filing for bankruptcy also means getting a new, fresh start. This can remove all the uncertainties and unnecessary extra work when trying to fight against debt. This is especially true for the amount of paper work to be done. It is like hitting the reset button. Psychologically, some people respond better when starting things anew.
Once you have filed for bankruptcy, you have every right to reject a collectors request to collect payments from you.
