CONSIDERATIONS FOR BANKRUPTCY
Credit card bankruptcy can happen to
anyone, if the debt is bad enough. And if you
have reached the point where you are bandying the word about, then your
debt is certainly bad enough. Debt, if not properly
controlled,
can snowball
into something so large and out of control that you are forced, by
circumstance, to use whatever means remain at your disposal to clear
your debt.
Simply put, bankruptcy
occurs when you lose the ability to make regular
payments to your creditors. Essentially, you’re out of money,
and out of time to make any more before your creditors come calling,
threatening legal
action.
Creditors may Initiate
Bankruptcy
In some cases, it is the creditors who initiate bankruptcy proceedings
in order to enforce their rights in the matter. Normally however
it’s the debtors themselves who declare bankruptcy. When this
happens, debtors petition the bankruptcy court, and bankruptcy will be
declared.
Liquidation
Once you’ve been declared bankrupt, you’ll be
obligated to surrender your assets and non-essential property to the
court for liquidation. Liquidation refers to the process by which your
assets and property are redistributed in order to satisfy your
creditors. Once your assets have been liquidated, i.e. sold off, the
proceeds will be distributed equally among your creditors, who will, in
their turn, forgive you your outstanding debts.
Since liquidation only
affects your non-essential assets and
properties, it is rare that you’d, for instance, lose your
home or many of your personal possessions (such as clothing). However,
you would lose most everything non-essential…cars, vacation
homes, anything deemed not necessary for you to
continue to live. Still, material goods are a small price to pay for
clearing the slate, so to speak, right?
Beginning of Problems
Now, while this may seem to be an end to your immediate problems, in
truth, it is only the beginning of a whole new set. Once
you’ve declared bankruptcy, you’ll be without
recourse to funds beyond those that you earn via gainful employment.
You’ll be unable to get loans from a bank, or from any other
lending agency. In many ways, declaring bankruptcy is the last hand in
the game. There is nowhere to go after it’s done.
Alternatives to Bankruptcy
There are, however, several alternatives to declaring bankruptcy, which
may help you clear your debt equally well. Consider
negotiating with your creditors before it comes down to the wire.
Remember, they don’t want you to declare bankruptcy any more
than you do. See if you can set up an alternative
payment
plan
of some kind.
Also, see if you can
restructure your debt into something more easily
controllable, or consolidate your debts in order to limit the amount of
money you’re paying out per payment period.
In the end, it is up to you
to decide whether or not declaring
bankruptcy is the right choice to make for your situation. Just bear in
mind that there are other options, and that while bankruptcy might seem
to be the quickest, most efficient solution to your problems, it may
prove to be a greater price than you can comfortably pay.