Sometimes, a person or a business gets so far into debt that they are not be able to pay back the money they have offered. In these cases, as a last resort, a person might file bankruptcy. Bankruptcy is a legal declaration of the inability to pay a creditor. While most cases of bankruptcy are filed voluntarily by the debtor, a creditor can also attempt to force a debtor to pay back what debts they can by filing a bankruptcy petition.
What Happens After Declaring Bankruptcy?
If a bankruptcy is discharged, the debtor is no longer legally required to pay certain debts. The creditors may no longer take any action to collect discharged debts, including any type of communication or legal action.
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To someone in the midst of financial trouble, having all debts discharged sounds too good to be true. However, bankruptcy is a last resort measure for those people who have absolutely no remaining assets and is accompanied by several significant disadvantages of its own. Bankruptcy is a type of penalty in and of itself, and before making a claim, it is important to seriously consider the disadvantages before taking action:
All property is liquidated and cash is taken. Your personal items, including your real estate, car, furniture, and other items, as well as investments and cash, are collected. Loss of rights to future property gains. In the event of an inheritance or a sudden viable opportunity, you may not have the right to lay claim to your future property. Not all debts are discharged. Certain debts are not eligible for bankruptcy. Even after your assets have been liquidated and your creditors have been repaid, you might still owe money to other credit agencies. Low credit rating. After filing for bankruptcy, your credit score will suffer. You may not be able to take out a loan or acquire a credit card for up to ten years after your debts have been discharged. Although filing for bankruptcy has significant downsides, it is an important option for many people who simply do not have the means to repay their debts. When financial troubles have taken over a person's life and there is nowhere left to turn, bankruptcy can clear a path so that debtors can get back on their feet and start over with lessons learned.
To learn more about bankruptcy, debt negotiation, foreclosure, or other financial issues, visit the website of the Milwaukee bankruptcy attorneys of the DeLadurantey Law Office.
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