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Debt Assistance Guide
Personal Bankruptcy
All too often people feel that bankruptcy provides a quick and simply way to rid themselves of what seems like an insurmountable burden of debt. Filing for bankruptcy is not however something which should ever be taken lightly and is a path which you should follow only after you have exhausted all other avenues.
Although the law makes it relatively easy these days to file for bankruptcy, this is just the start of what for many can be a difficult and painful process as you are then required to lay your entire financial history before a judge and provide him with all the information required to justify your request to be declared bankrupt. At this point you are also opening yourself up to your creditors who can, if they wish to do so, object to the grant of your application.
Even if you do get through this stage and are successful in your filing, you will then be faced with the long term implications of your new status as a bankrupt and these need to be considered carefully before you start down this road.
First, you need to know that not all of your debts will be cleared by bankruptcy. For example, such things as back taxes levied within the past three years, student loans and certain other forms of debt are exempt from bankruptcy protection and will still need to be paid off.
Second, you need to understand that you will automatically lose any credit cards which have outstanding balances on them and whether or not you will be permitted to retain other credit cards is entirely at the discretion of the credit card companies concerned.
Third, you will find that it is almost impossible to obtain any substantial line of credit (such as a home loan) and that, even when you can find a lender who is prepared to grant you credit, you will invariably have to pay high rates of interest - which is possibly in part why you found yourself in the position of filing for bankruptcy in the first place.
This might not be so bad if this situation lasted a reasonably short period of time, but your bankruptcy will remain with you for 10 years, during which time you will need to maintain a virtually spotless credit record if you are to obtain credit again once your bankruptcy is discharged.
There are two other important aspects to filing for bankruptcy which you also need to take into account.
The first is that you may be required to clear down some of your debt as part of your grant of bankruptcy by surrendering some of your assets. Certain assets are generally protected, such as your primary residence and your automobile. However, if you have a second home, a second car, a boat, expensive jewelry and a host of other assets then, depending upon how these were acquired, the judge may order that these be sold to pay down your debt.
The second is that bankruptcy itself is not free and you will be required to meet any court costs, together with your attorney's fees should you decide to employ an attorney to handle your bankruptcy for you.
Now this might all seem very black but there are of course advantages to filing for bankruptcy, not the least of which is that it will halt debt collection activity, protect your salary and stop any foreclosure action. It will also bring one chapter of your life to a close and allow you to start the process of building a new and favorable credit history.
For some people it can also serve as a very necessary wake up call and can be an excellent way to force you to face up to years of financial mismanagement and put your financial house in order.
Bankruptcy for most people is however a painful process and it is never advisable to go down this path unless you fully understand what you are doing and are satisfied that there is no other course of action open to you.
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