Are you buried in so much debt that you are considering filing for bankruptcy? Just saying the word bankruptcy seems like you have just announced your own death sentence to the entire world. Filing for bankruptcy protection is not the end of the world, it can in fact help you eliminate debt now and gain monetary stability for the future.
Do you really know what it means to file for bankruptcy? If you announce bankruptcy, it basically means that you have a lot of debt and you have no way to pay back these debts. When you file for bankruptcy protection and get it approved by the court system, it means that you will end up with less debt or no debt at all. Bankruptcy has its own benefits for those drowning in debt, but it also comes with a big drawback. You can expect to have really bad credit history on your credit report for the next 7-10 years when you filed for bankruptcy protection. Even though you can rebuild your credit history between this 7-10 years, your bankruptcy filing will stay on the credit report for at least this amount of time. So even if you can rebuild your credit score to 800, your credit report will still indicate your bankruptcy filing.
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What is the difference between bankruptcy and debt consolidation? The big difference between bankruptcy and debt consolidation is the amount of debt you owe and if you can or cannot pay it off. Bankruptcy gives you the chance to get rid of the debt that you have over the years. If you can take several years and pay off your debt, then you should look into debt consolidation and not declare bankruptcy.
In the case of debt consolidation, this is always a 3rd party debt consolidator involved. Most of the debt consolidator will require you to divulge all the debt that you have and forge a way for you to pay down the debt over time. The debt consolidator generally ask you to pay him/her a set amount per month. This debt consolidator will then distribute the monthly payment to the various debtors that you owe, effectively giving you a clear picture of your financial health. Even though debt consolidation sounds like a doable alternative, we will proceed with our discussion on the bankruptcy as you have so much debt that it is next to impossible to pay them off.
Bankruptcy is not a privilege, it does not mean that you can just declare bankruptcy if you want. Declaring bankruptcy's first step is to file your petition with the state. The bankruptcy petition informs the court system that you are preparing to declare bankruptcy. To file the bankruptcy, you should look to hire a bankruptcy lawyer to help you with all the paperwork. The bankruptcy lawyer will help you file the petition using all the right documents. After you have secured a bankruptcy lawyer, you will need to attend credit counseling class which comprises of a pre-bankruptcy and post bankruptcy class. You will also be assigned to a trustee who will preside over your bankruptcy hearing. If everything goes right, about 45 days after the bankruptcy hearing with the trustee, you should be given the bankruptcy discharge papers. Once you have been given the bankruptcy discharge papers, that means that you are no longer in debt with all the creditors and you can start with a clean slate financially.
The significance of the bankruptcy discharge papers is that it confirms the elimination of all the debt you have stated in the bankruptcy filing documents. Now that you have become debt free, be prudent about what you are spending and do not ever fall into debt like you did previously. Do not ever incur so much debt, live within your means, only spend what you have and try to save some money for the rainy days. Never take your past bankruptcy lightly. Learn from your mistakes and do not ever accumulate too much debt. You should learn from your mistakes in the past and be smart about your financial wellness. Do not forget the old saying "fool me once, shame on you; fool me twice, shame on me". Learn from your past mistakes and embark on a life without debt and strong financial well-being.
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