Bankruptcy
A Means To And End Or A New Beginning?

Bankruptcy is to some shrouded in mystery. As a solution used during times of financial hardship, it can help people absolve debt and make a fresh new start away from being broke or maybe even broken.

For years going bankrupt has been portrayed as the ultimate financial failing, bringing those in extreme financial dire both fiscal relief and a dented pride, but now the tide is turning ever so slightly towards a new era of resilience, repayment and forgiveness.

What Is Bankruptcy?

The most simple explanation is that of a person who has incurred too much debt and is without the means to pay. A person then may choose to file for bankruptcy at which point their assets are required to be sold to pay debts, but some assets are exempt and can't be touched.

Upon becoming bankrupt one's debts are usually wiped and you may proceed to find gainful employment and live freely. The exception is when in some countries you are required to make payments back to the creditors if your income reaches a certain level.

You may also become bankrupt outside of your own volition if a creditor applies to have you involuntarily bankrupted, at which point it is forced upon you unless you can pay the debts.

Repercussions

While there is a social stigma attached to the bankrupted, there are also other nuances that may follow including, long term debt repayment, the inability to take out a loan or receive finance of any kind, weakened business reputation and in some countries you can't leave that country for a set period of time.

Not being able to receive finance is a major concern for those considering becoming bankrupt and is often the key decision influencing factor for many.

Criminally Bankrupt

This is a warning - Don't even think about it!

Stacking up debt and loans, concealing assets and then proceeding to file as a bankrupt is illegal and not a good idea.

For some there is a temptation there, but like insurance fraud, it is illegal, immoral and runs a high chance of incarceration upon conviction.

Don't even consider this!

Choices

Weighing up your choices is an important aspect, the need to find a way to pay debt versus clear debt with the hassles of a bankrupt? It's a big decision and never one that is entered into lightly.

Finding ways to pay debt more often than not hinges on finding another loan, which is of course more debt. Creditors sometimes when offered will settle for a slower, smaller payment scheme, especially if they think the thought of you bankrupted will bring no reward to them.

In a few small cases a tighter budget and a smart repayment plan are all that are required to avoid becoming bankrupted.

Protection

In the case of being forced bankrupt by creditors there are assets that are exempt and in most cases your retirement fund is protected. This is dependent on your local laws and as such you should be sure to check before making any decisions.

Modern Perceptions

Nowadays there is less of a criminal perception in relation to being bankrupt than 20 or 30 years ago when bankruptcy was associated with "shady" dealings and "shifty" types. In modern times becoming bankrupt is considered a viable solution to insurmountable debt during times of financial hardship.

Many bankruptees seek to pay off their debts when they are back on their feet, even if they aren't legally required to do so. The modern, more forgiving social conscience has reduced the fear and made bankruptcy a more objective alternative for many.


You have choices. Weighing up your individual situation is the key and if you find that filing to become bankrupted is the solution then it may be a wise decision after all.

Avoiding high levels of debt in the first place is the best measure as prevention negates the need for the solution, but if you are in a position where you are seriously considering becoming bankrupt then consult a credit counselor to see if you have options unique to your personal circumstances.

Bankruptcy By "Alan Henderson"



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