An Introduction To Claiming Bankruptcy | Finance Agreements

Some people may be confused about claiming bankruptcy. In some areas the rules have been tightened and therefore it is important to be careful before filing a claim. It is important to explore your options before making a final decision.

Other people believe the opposite. They may think that they can accrue a lot of debt and then file for bankruptcy, believing that this will wipe out their debts without consequence. This is also not true as purchases will be reviewed in a claim and this can effectively amount to fraud. This is why it is important to get the right advice before you make the claim.

However some people are also convinced that this is a great way to wipe out their debt. This is untrue for a number of reasons. In any hearing part of the evidence will include looking at any purchases made so it is important that this is not done in a frivolous way. There are also certain debts such as student loan payments that are exempt and must be repaid.

What you have to pay depends on the type of bankruptcy that you file for. It may mean paying off a certain amount over a period of between three to five years. Another form may involve liquidating the assets of a debtor. A judgement will usually be made based on what is appropriate for all parties concerned.

One thing to be wary of is that bankruptcy can have a big effect on your credit rating. The claim will be on your records for at least ten years. During this time it is still possible to credit although it is likely you will be charged a higher rate of interest for it.

It is possible to make a claim without legal representation. However it is advised to do so in order to make sure that you make the right claim. What type you can do depends on the rules in your local area. You may be able to liquidate your assets or you may have to pay an amount to your creditors over the course of around three to five years. The kind of debt exempt from the agreement may vary according to the rules of your local area.

In short claiming bankruptcy does not have to mean losing your home, vehicle or credit rating. However it is important to be careful and to explore all your options before deciding whether this is appropriate for you. Talk to your local independent financial adviser before filing a claim so you can decide what course of action is right for your financial needs.

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Source: http://www.finance-agreements.com/2011/05/18/an-introduction-to-claiming-bankruptcy/

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