Are you wondering whether declaring bankruptcy would be the best option for you? If so then you have come to the right place! Here you will find everything that you need to know about bankruptcy and your possible alternative options available to you.
Knowing When to Declare Yourself Bankrupt
It can be difficult knowing when to declare yourself bankrupt. At one time bankruptcy was seen to be an easy way out of debt as it can eliminate everything that you owe. However, it was soon realized that it is actually quite devastating to declare yourself bankrupt and so it is always better avoided when possible.
Bankruptcy stays on your credit report for up to ten years. This means that it will make it extremely difficult to get a mortgage or any form of credit in the near future and possibly for ten years. It will be made public knowledge that you have been made bankrupt and your reputation will be slightly damaged.
It may give you a fresh start but it will also have a negative effect on your life too.
It is always better to avoid bankruptcy whenever possible. One way in which you can do this is through debt management. This is a process which allows you to make regular monthly repayments that you can afford to all of your creditors. You will work closely with a debt management company to negotiate a repayment plan with each creditor. You will create a financial statement which will describe your outgoings and incomings and from that a realistic repayment plan will be developed. It is an easy way of paying back what you owe and it also ensures that you have a little money left over to enjoy life too.
Debt consolidation is another option that you have. This basically involves taking out a large loan which you will repay back over a long period of time.
It allows you to repay all of your creditors so that you now only owe one lender money. The repayments will be lower as you are paying it back over a longer period of time and it generally just makes your debt easier to handle.
Bankruptcy should only be considered if you cannot afford to even make minimum monthly repayments to your creditors. It is a last resort and should never be looked upon as a easy way out of your debt problems. Most creditors are understanding and they are willing to work with you to create a repayment plan to suit you. So contact the people who you who money to and see if you can work out some form of repayment plan. If not then bankruptcy may be your only option.
You have to be extremely careful when you are filing for bankruptcy if you want to avoid being accused of bankruptcy fraud. There are different types of bankruptcy fraud and it is possible to commit the crime without even realizing it.
The Most Common Types of Bankruptcy Fraud
The main way in which you can commit bankruptcy fraud is by not declaring all of your assets. When you file for bankruptcy you have to give a list of everything that you own. From there it is worked out what will be taken away from you and how much of your debt you can repay by selling off your assets.
Not all assets will be sold, but all have to be accounted for.
Many businesses and individuals attempt to hide some of their assets in order to still keep them after bankruptcy. This is known as fraud and if found out the penalty can be harsh. Basically you can be accused and charged with bankruptcy fraud for the following circumstances:
• Concealment of documents
• False Declarations
• Fee Fixing
If you attempt to hide anything from the courts and it is discovered then you will pay a high price for it. It is possible to get away with bankruptcy fraud but it is definitely not worth the risk.
Of course not everybody who is found guilty of bankruptcy fraud knew what they were doing. It could be that you simply believe that certain things are exempt from bankruptcy and so you just didn’t list them. However, it is always better to list absolutely everything that you own and let the court decide
what you can keep and what you can’t.
The most common way in which people conceal their assets is by giving things to relatives or friends to look after. Creditors cannot take anything that isn’t yours and so if you do secretly give assets to friends and relatives then they will not be accountable. However, if it is found that you have concealed the assets in such a way then you will still get charged with fraud.
The punishment for bankruptcy fraud is harsh. You could gain a fine of up to £250,000 and/or spend 5 years in prison. It will go on your criminal record and that will obviously not look good to future employers or creditors!
Overall bankruptcy fraud is quite common and it is extremely risky if you plan on trying to avoid losing your assets.
Filing for bankruptcy is never an easy decision. You have to consider everything that will change and exactly how bankruptcy will affect you. There are different types of bankruptcy that you can file for and each will determine what happens to you and your possessions after you have been declared bankrupt.
One thing that you may not have thought about is bankruptcy exemptions. There are certain things that you do get to keep even when you have been made bankrupt. So what exactly is exempt from bankruptcy?
The Things that you get to Keep
It all depends upon where you live as to what you get to keep. If you live within the United States then each state will have its own rules as to what exemptions from bankruptcy you are entitled to.
If you live in Texas for example then you get to keep up to 10 acres of homestead within a city or 100 acres elsewhere. If you have a family then the limit is increased to 200 acres. However, if you live in South Dakota then you can only be exempt up to one acre in a town or 160 acres anywhere else. So there are different rules depending upon where you live. Some states will not work pout the exemption in acres, they will go by how much your home is worth.
Generally no matter where you live you get to keep basic assets. The whole point of declaring yourself bankrupt is so that you can have a fresh start. In order to do that you will need some assets and the court recognizes that.
If you own a car then it will depend upon whether there is any equity in the car as to whether the lender will take it from you. If there is no equity then it is unlikely that the lender will take your car from you. However, if you have taken a car loan and you have fallen behind on those payments then unless you bring the payments up to date or arrange to pay in some way, the car could still be taken from you.
Generally if you file for Chapter 7 bankruptcy then you get to keep all of your assets. This is because you are making arrangements to pay the debt.
However, if you file for Chapter 13 bankruptcy then you will lose some of your assets.
Overall it will depend upon where you live as to what you will lose. However, you always get to keep basic assets and these are determined by the trustee who is assigned to your bankruptcy case.
