Wednesday, February 18, 2009
EFFECTS OF PERSONAL BANKRUPTCY
Bankruptcy, to few, is a dreadful option and one must not consider it until and unless it is required. But to some other it is the easiest option to get relief from the debt burden. No matter what is the case it is a fact that bankruptcy is the legal way to deal with financial burdens.But bankruptcy is something which should be taken seriously. It is not a child’s play as the results are really harsh and the effect lasts for long. Personal bankruptcy is of two types: Chapter 7 and Chapter 13.
Chapter 7 is also known as liquidation bankruptcy. Here, the person who is declared bankruptcy has to sell the non exempted assets to pay off the creditors. This is one of the biggest disadvantages as the person is loosing some of his or her possession. Some cases the borrower might have to loose the house or the car even. The report of the bankruptcy filing will remain in the credit report of the customer for 10. This will prevent the person to obtain any loan from the lender in the future. And even if an application of a loan is approved then rate of interest will be much higher than the normal.
Chapter 13 is not so severe like Chapter 7 but still the effects are strong. The report of filing bankruptcy Chapter 13 will stay in the credit report for seven years. During this time also similar problems will be faced by the borrower as in case of Chapter 7. Moreover Chapter 13 is also a time consuming process and normally take 3 to 5 years to complete.
So in any cases declaring personal bankruptcy has its own negative effect. And can be only considered after consulting an attorney.
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