Bankruptcy is a legal process that is designed to help people with debt. It helps individuals and businesses eliminate debt. However, bankruptcy can have a negative impact on individuals and others. In addition to the financial consequences of filing bankruptcy, there are a number of social implications of filing for bankruptcy.
Some of the most well-known consequences of bankruptcy include the loss of property. A bankruptcy trustee takes control of your assets and liquidates them to pay off your creditors. This process may leave you with little or no income to support yourself.
If you are thinking about filing for bankruptcy, you should consult a bankruptcy attorney. He or she will discuss your options and provide you with information about the process. You should also understand the long-term effects of bankruptcy on your credit report.
When you file for bankruptcy, you must complete a personal financial management course. Your income must be listed in the petition and you will need to have an idea of how much you can afford to repay. You will also need to list all the assets you own. For example, if you own a house, you will need to be able to show that your home is worth less than the amount you owe on it.
Once your debts are eliminated, you have the option of paying them back through a repayment plan. The plan must be approved by the court and continue for three to five years. During the period, you will be required to keep up with the payments. Any changes to your situation can cause you to alter your repayment plan.
Upon the completion of the repayment plan, you will receive a discharge. While this is a relief, you will not be able to keep any of the assets you were unable to pay off. There are exemptions for certain types of income, like child support, spousal support, and some taxes.
Some of the most common assets that are exempt from bankruptcy are household items, vehicles up to a certain value, and tools of the trade. A car can have up to $4,450 of equity. Most student loans are excluded from bankruptcy.
In general, you will have to be honest with your creditors and the court. Bankruptcy is considered a negative mark on your credit report, and it will remain for seven to ten years. Taking on new credit after this point can be difficult.
Besides the financial penalties of bankruptcy, you will be disqualified from some jobs. This includes accountants, lawyers, and certain positions within the government. Also, you may have trouble renting a home.
Generally, you will not be able to file for a mortgage if you have filed for bankruptcy. Your landlord will also likely refuse to rent to you. Those who file for bankruptcy may be subject to background checks.
The long-term effect of bankruptcy on your credit is quite significant. Unless you have a great credit history, you will have to wait several years before you qualify for a loan. Additionally, your interest rates may be higher.
The Social Implications of Filing Bankruptcy was first seen on Help with My Debt