Bankruptcy Mistakes To Be Avoided

Statistics disclosed that every second man in United States is troubled with unpaid debts. It is not an uncommon occurrence to see people, debtors and creditors’ alike filing for bankruptcy proceedings. Although many solutions are available, solving debt problems is still a daunting task.

To many financially distressed individuals, taking the bankruptcy option is the most viable solution to debt problems. Bankruptcy is the ideal tool to wipe all debts, to afford the debtor a new lease in life and a chance to start anew. If these are your convictions too, beware! You may be taking the worst decision in life.

Don’t be too hasty in taking the bankruptcy option. This debt management tool will not solve all your money/debt problems. It can even have negative repercussions that can eventually hurt you. If you think bankruptcy is a surefire solution that will assist you to run away from obligations and from paying your debts, think again. Bankruptcy is only a temporary solution for individuals, who have the misfortune of running into unplanned, unforeseen or unexpected financial troubles and have no way of meeting or paying them.

A bankruptcy is in a way advantageous to the debtor because this will stop the harassment of creditors. A debtor will be given a chance to start anew. However, the negative impact should not be taken for granted. A credit record tainted with bankruptcy will be detrimental to future employments as well as business dealings. You will be labeled a bad credit risk by banks and other lending institutions and an unreliable financial proposition by future employers. Also you must be aware that even if you got a court discharge from your debts, other debts such as child support, educational loan, penalties and fines will still have to be borne by you.

Never lie about your financial circumstances when filing for bankruptcy. Never see it as official pardons from paying your accumulated debts rather see it as a way to repair your financial footing or a way to regain financial health. Hiding assets will have a grave impact on the proceedings.

Filing bankruptcy is not an excuse to have new debts to finance or to pay old debts. Borrowing money when you don’t have the capacity to pay would further damage your credit worthiness. Using pension and retirement funds as security for debts is a NO, NO, not when you know that they are exempt from bankruptcy proceedings.

Never attempt to do the bankruptcy proceedings without the help of insolvency practitioners or bankruptcy lawyers who are experts and more knowledgeable in the field of financial and debt management. Being a newbie to the process, you will not have the pertinent knowledge with regards to negotiating deals and legal documentation. The paperwork may be simple but filing up entries may be beyond your ability. The debt management counselors would be a big help in this aspect as well as in negotiating deals that would be favorable to you.

With these pointers, it is hoped that a healthy financial footing will be achieved with or without choosing the bankruptcy option.

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