The End of the Road - Why Bankruptcy Should Be Your Last Option

  • Added:
    Nov 22, 2012
  • Article Views:
    1235
  • Word Count:
    430

As each day passes people become more and more consumed with financial difficulties. Unfortunately, these difficulties can continue to increase to the point where a person is unable to repay any of their debts. As a result, bankruptcy has become an avenue for people to relieve themselves of the debt and financial obligations they have accrued. Despite the well documented setbacks of this process, people continue to fill the offices of bankruptcy specialist at an alarming rate.

The statute of bankruptcy was initially established under English law in the year of 1542 and centered on insolvency. However, bankruptcy as we know it today provides individuals two platforms for relief, chapter seven and chapter thirteen. While both procedures will successfully eliminate your debt, the function and usage is very differently. Chapter seven is typically referred to as liquidation bankruptcy and is intended for those looking for a fresh start.

Liquidation means you must be willing to loose any assets outside the jurisdiction of your bankruptcy exemptions. Chapter thirteen however, is referred to as the reorganization bankruptcy. This is because the goal of this aspect of bankruptcy is to save assets by combining them into a fixed monthly payment. It should be noted, that chapter seven bankruptcy stays on your credit report for ten years. Chapter thirteen however, stays on your report for only seven years.

The truth is many people who file for bankruptcy never really recover from this process. This is because they don't learn better ways to manage their money. Typically, bankruptcy is a direct result of two things: inability to live within your means and under-saving.

The average person realistically, doesn't make enough money to adequately support themselves and their family. In situations where this is the case, saving money is not a reality. However, juxtapose that to a person who does have sufficient income that exceeds the normal cost of living. How does this person end up in the bankruptcy line? Overspending is usually the main reason for this type of individual to file for bankruptcy. 

If you spend more than you make or more than you can afford to, your gonna end up in debt. This is true in every case outside of extreme medical situations that occur suddenly. Without a doubt, bankruptcy will follow you around for years to come. Even after it clears off your report, you will still have to deal with the ramifications of this debt relief option. Remember, by curbing your spending and increasing your savings you begin the process of getting yourself out of debt. And this is the only way to truly do it.

Author's Profile

Rick Patel enjoys writing articles for InterestingArticles.com. View the Rick Patel Author Profile


Please Rate this Article
Poor Excellent