When a person or business can’t afford to pay their bills anymore, they are a few steps away from poverty.
Many people think that bankruptcy and poverty are closely connected, but that’s not true.
Bankruptcy is a legal declaration to the world that you don’t have any money left to pay anyone. Filing for bankruptcy reduces your debt.
After you pay a fraction of your debt to your debtors, the legal system covers the rest.
When you’re in poverty, there is no way out. No one will help you pay your bills and you are at the mercy of your debtors.
So when you see a celebrity file for bankruptcy, don’t think that it’s the end for them. It may be a new beginning.
Consider the following before you look down on bankruptcy:
- Bankruptcy Ends Your Debt
If you borrow money, or take goods on credit, your debt will pile up over time.
There is no ceiling to how high debts can grow. Just like weddings, they take as much as you give them.
Filing for Bankruptcy causes the courts to put a lid on your debt until it can evaluate your assets.
At that moment, your debt can’t grow any further and is likely to be erased for the rest of your life.
The longer you wait to file, the higher your debts will be.
2. Bankruptcy Stops Creditors From Harassing You
Some people are afraid to answer the phone these days because of creditors.
These will not hesitate to call and ask you why you haven’t paid them as yet.
Those conversations are often awkward and uncomfortable.
If you want to stop the creditors from calling, filing for bankruptcy might be the way to go.
3. Bankruptcy Gives You A Fresh Financial Start
Apart from settling your debt, bankruptcy allows you to reposition yourself financially. You can now start a new business or get involved in another venture without debt hanging over your head.
While your access to credit will be limited, there are still many options you can explore.
The fresh start might be what you need to become financially successful.
Before You go and file for bankruptcy, it’s important that you know which type is applicable to you.
For individuals, Chapter 7 bankruptcy is what you need to file for. Businesses can file for Chapter 7 too, but are more likely to file for Chapter 13 bankruptcy.
As you can guess, there are levels of bankruptcy. You might want to talk to a legal expert and figure out your best options.
Debt doesn’t have to be forever, filing for bankruptcy can help.