To most people, bankruptcy is something to be avoided at all costs. However, it might be the direction to follow when things get to the worst. The process of bankruptcy is authorized by the federal court and debtors are given the option of disregarding or reorganizing their debts through following repayment plans or selling their assets. This process can be initiated under different plans depending on the financial state of the debtor. However, this is an enemy to be avoided because of the reasons given below.
If you happen to take this option, you credit will be hit badly with negative balances. Your credit score will badly be brought down and you will only have a negative record in your credit report for a period of 10 years. When this happens, you will never qualify for any new credit services or loans until 4 years are over.
The enemy will make you lose your adorable property. Some assets will definitely be sold in order to repay back your debts as stated in the agreement plans. Your beautiful house and car will be the main target and you will have to lose them depending on the local state laws.
By choosing to have this enemy, you will not have eliminated all your debts. The misconception that bankruptcy will exempt you from all your debts still remains mythological. Back taxes, spousal/alimony support, student loans and other minor debts will still remain. If you do not want to be in problems, stay away from applying for bankruptcy. It is advisable to negotiate alternative payment plans with you creditors instead.
You risk having your property repossessed by your creditors. Any creditor whose amount has not been cleared 30 days from the time of filing will legally be authorized to sue you. This will lead to you property being repossessed. In addition, you will not escape from your personal responsibilities such as repaying your mortgages and loans in case you decide to keep your property.
Your chances of qualifying for any loans will be diminished. You may have to wait for up to 4 years until you lawfully become eligible to make an application for secured loans. Even if you made a choice to take unsecured loans, it will still be difficult to qualify.
Worse still, your financial situation will negatively be impacted. You will no longer be able to rent or buy a home or car. The state of your security clearance will also be affected. This is especially when you have not informed your employer about your plans of applying for this risky process.
Your retirement plan will never secure. You risk losing significantly even from retirement package. This may however depend of the type of exemption laws in your state. It is not unusual to have your government pension, social security and other retirement packages tapped to settle your debts. To be on the safer side, it is advisable to protect your retirement package by avoiding filing for bankruptcy. This is an enemy which everyone should avoid.