Bankruptcy may happen to anyone. Inefficient money management and sometimes even outside economic conditions may be responsible for personal bankruptcy. Here are certain lesser-known facts about bankruptcy that you should be aware of.
Even The Rich Get Bankrupt: Though commonly, it’s believed that it’s only the poor who get bankrupt, even the rich might get bankrupt. The recent economical upheaval has brought in a lot of monetary loss for business investors. Many of them have gone bankrupt. The rate of personal bankruptcy this year is seen to be 35 % approximately. Job losses and real estate business slump were seen to be the major reasons for personal bankruptcy in the present times. Also, the rate of bankruptcy is expected to rise with the progress in economic recovery.
Bankruptcy Penalties Are Individualistic: Bankruptcy penalties are individualistic though there are some mandatory payments that you cannot escape if applicable like child support alimony or student loans, in most cases your debt penalties are adjusted according to your convenience and payment capacity. The laws business bankrupt governing bankruptcy differ from state to state and if you are presently in one you should consult a financial expert for that.
Bankruptcy Does Not Mean That You Lose Out On Everything: You might be of the general opinion that when you go bankrupt, your lenders leave you with nothing. That’s not true always. Many a time if the value of their asset is less than a threshold value or if it’s on a second mortgage the value of the property is less than the equity and as a result bankruptcy happens. In such cases, you are allowed to keep the property. The homestead exemption varies from city to city.
Bankruptcy Is Better Than Postponing Credit Dues: When you have to make a payment on your credit card if you are bankrupt your credit score will plummet. Declaring that you are bankrupt is better than postponing payments because bankruptcy might remain on your credit reports only for 10 years or so during personal bankruptcy which period you stand a chance of improving your finances. But in the case of postponement of payment, you might actually accrue a huge amount of money which might be difficult for you to clear in years.
Debt Settlement Firms Are Not A Very Good Option: Debt settlement firms may promise to settle your debts and size up creditors and to shape up your debt by about 75 % but in reality, they don’t do much because they get paid almost every month and they don’t strive to settle your debts soon.
Don’t Try Early Paybacks: Once you declare your bankruptcy, don’t try to repay your closest relatives or friends, within one year. Also, don’t try to sell off your old vehicle for cheap or hide your assets from the court. Your bankruptcy protection will be lifted and creditors will hound you more than ever. They can even sue you and get you imprisoned.