People under severe financial problems are naturally in distress. They are frustrated and desperate especially when creditors are beginning to pressure them into settling their debts. In worst situations, when the chances of finding money to pay off the debt becomes almost impossible, the easiest way out for many is filing for bankruptcy.
However, is filing for bankruptcy the best solution? To know the answer, let us look into bankruptcy and its implications.
Filing for Bankruptcy: When?
Generally, a person in debt should file for bankruptcy only if and when he has exhausted every possible means to come up with a compromise agreement with his creditor and has failed in his efforts.
What Happens After Bankruptcy is Filed?
Upon filing for bankruptcy, the creditors will be notified immediately about it. The debtor can then expect that the unsecured creditors will cease from going after him for the settlement of his debts.
What follows after is that a trustee will be appointed to take charge of the bankruptcy case. The trustee’s job is to make sure that debtor will really pay his creditors. To facilitate payment of the debts, the trustee will sell most of the debtor’s assets. It will also be the trustee’s responsibility to make sure that when the time comes that the debtor will have sufficient income later, the debtor will begin to pay part of his income to the repayment of his debts.
Another responsibility of the trustee includes looking into the financial affairs and transactions of the debtor to see if he has transferred some of his money or properties a third party. His aim is to recover those so it can be used to reconcile all the debtors’ financial obligations.
When a person files for bankruptcy, an agency will keep a permanent record of the bankruptcy, and this record is accessible by the public for a certain amount of fee.
Under normal circumstances, bankruptcy lasts for at least 3 years, but this can also be extended.
What Happens Next?
Filing for bankruptcy is only the beginning of a long and tiresome process. Here are some of the things that will happen right after the filing of bankruptcy:
- Every time a debtor moves to a new place or address, he has to inform the trustee about the move and give him the new address;
- This is also applies when changing names such as when getting married, getting remarried, after a divorce. The trustee has to be informed about the new name;
- When traveling abroad, the debtor has to secure a written permission from the trustee. There are situations when a debtor will be required to surrender his travel documents such as passport or visa to the trustee;
- Any changes in income and assets during bankruptcy must also be communicated to the trustee.
In conclusion, filing for bankruptcy is not good as it will have a negative impact on a person’s credit record and history. It will also take a very long time to repair a credit record. So before finally deciding to file for a bankruptcy, think about all the consequences first. Of course to some it’s the only option left, and there is life after bankruptcy.
This is a topic which is close to my heart…
Thank you! Where are your contact details though?
#1 Comment vom 12. March 2012 um 8:44 pm