Should I File Bankruptcy? – The Question No One Wants To Ask By Richard Wilson

Debts are piling up and the creditors are queuing at the doorstep – should I file bankruptcy? When you find yourself backed into a corner of debt and you can’t foresee a way out, then filing for bankruptcy could be the right solution for you.

The stigma of filing for bankruptcy isn’t what it once was. Although it sounds like the end of the world, you can rest assured that you’re not the only person feeling the pinch. Many highly successful entrepreneurs have been bankrupts at some point in their careers and tens of thousands of people file for bankruptcy each year.

Declaring bankruptcy can relieve the enormous weight you have on your shoulders and stop the dreaded calls from the debt collectors, allowing you a fresh financial start; however it does come at a cost. Before you ask yourself should I file for bankruptcy? Take the following into account:

Length of bankruptcy – The length of time you will be classed as a bankrupt for will vary from state to state and country to country, depending on local laws. The standard range is anywhere from one to three years and in certain circumstances, your bankruptcy may be extended even further.

Bankruptcy wipes most debts, not all – While it’s true that most of your debts will be discharged, filing for bankruptcy is not a get out of jail free card. You must still pay taxes and any child or family support payments that you are liable for. Likewise if you still owe for student loans or criminal fines and penalties; these debts and payments cannot be discharged. While you will gain the luxury of not having to make regular repayments, you will lose the right to your non-exempt assets. These will be placed in the hands of a trustee, who will in turn dispose of them in order to pay your creditors.

Loss of Company – Under most circumstances you will be banned from running a company, or being involved with its management without the permission of a court.

Personal Impacts - As a declared bankrupt you may be required to forfeit your passport to a trustee and in many cases you will not be able to leave the country without written permission. Routine tasks such as obtaining insurance may become difficult. You may be required to pay a bond for the connection of electricity, water and telephone utilities. Future job opportunities may be affected.

Furthermore, filing for bankruptcy is the worst thing you can do for your credit rating. The good news is it doesn’t last forever. Once you have been discharged, through sensible money management you can regain a good credit rating relatively fast. This may well be part of the reason why so many people are choosing to file now in search of getting a clean financial slate. So if you’re in a situation where you need to ask – should I file for bankruptcy? Take the preceding information into account, but remember, it’s not the end of the world.