Taking a loan is a big decision that requires a lot of analysis. I am sure that you must have pondered upon this decisive stride and strategized your financial management. But it’s also true that every ounce of strategy is risked to unpaid debt that hovers overhead.
If you are experiencing that pressure over you, then just make sure that bankruptcy is not the only option to shun away that stress. There various reasons that will prove my point:
Some loans are not discharged. According to the policies, loans like student loans are not repaid. When you file for bankruptcy, you cannot be freed from alimony. After all the procedures, you cannot free yourself from all the stress. There will still be a definite cloud of unpaid debt.
Let’s assume that your situation has worsened to a point that makes you file bankruptcy. Now let’s say you file the chapter 13 bankruptcy. It will reorganize all of your debts according to your income. It’s like the situation where all of your expenses will eliminate half of your income. The rest free cash won’t be free anymore! The reorganization will tighten your finances. The free cash of your income will now be used to repay your debts. And furthermore, this situation is going to continue for at least 3 to 5 years.
The unpaid taxes that levels up your pressure will not be discharged in this process of bankruptcy. Not fair! Be it your income tax, or the payroll money (of course this applies to the entrepreneurs); you won’t be rewarded with the elimination of these parameters.
Just think about the exception that bankruptcy has. Not paying the taxes and stand-out loans. Still it will create the frowned mark in your credit report. And what’s more is you cannot get rid of it for around 10 years. It will act like a Jinx for your financial self. If you apply for any kind of financing or some other loans, you will have to pay over high rate of interest.
Well, what if you have some hard-earned assets or have an emotional connection with them. Filing a bankruptcy can risk their existing association with you as an owner even if they do not fall in the category of secured assets. The process can use these assets to pay off your debts to the creditors.
Just assume that fortune presents you with an inheritance of some property. For example, you become the beneficiary under a will of a person who just died. After the condolence, you will thank for the received gift. But if you have applied for the bankruptcy, the process will exclaim- Oh! You spoke too soon. Even before you are termed as the legal owner, the bankruptcy trustee will run after that asset to repay your creditors.
So, just think about all the options and analyze your situation wisely. To opt for Bankruptcy is of course a wise decision for some debtors, but then, it is also the last option.