What does bankruptcy mean to me?

Have you been thinking about filing for bankruptcy protection? Given the negative connotation of the word bankruptcy, are you scared to wits what it can do to you. If you do choose to file for bankruptcy protection, it can guarantee your financial well-being in the future.

What is bankruptcy and what does it do for me? A simple description of bankruptcy is a way to eliminate your debt and for you to start fresh with a clean slate financially. Bankruptcy eliminates most if not all of your debt and lets you start new financially. This is the positive side of the bankruptcy process, but it does come with a negative side. Once you have declared bankruptcy, you will have a bad credit history for the next 10 years. The downside to filing bankruptcy is that your credit report will be marred for the next 7-10 years.

When should you consider bankruptcy versus debt consolidation? The big difference between bankruptcy and debt consolidation is the amount of debt you owe and if you can or cannot pay it off. Bankruptcy can eliminate the mountain of debt that you have accumulated over the years, hence getting rid of your responsibility to pay it off. If you can pay off your debt in reasonable amount of time, you should regard debt consolidation instead.

With debt consolidation, you will look for a debt consolidator who is keen to manage your debt. With the help of the debt consolidator, he/she will assess all the debt that you have with various creditors and come up with a payment plan for each of them and eventually pay them all off in due time. The debt consolidator generally ask you to pay him/her a set amount per month. This debt consolidator will then distribute the monthly payment to the various debtors that you owe, effectively giving you a clear picture of your financial health. Even though debt consolidation sounds like a viable option, we will continue our discussion on the bankruptcy as you have so much debt that it is next to impossible to pay them off.

Bankruptcy should not be taken without due consideration. It is available to you if you so choose. Declaring bankruptcy's first step is to file your petition with the state. The bankruptcy petition informs the court system that you are preparing to declare bankruptcy. The process of bankruptcy involves getting a bankruptcy lawyer (I am sure you can do it yourself with all the right paperwork, but why do you want to take the gamble?), collect all the required paperwork/documents for filing the petition, attend credit counseling, meet with the trustee assigned to your bankruptcy case, wait for the bankruptcy discharge. After your bankruptcy hearing withe the trustee, and barring any unforseen circumstance, the bankruptcy court will send your bankruptcy discharge papers. This discharge papers effectively say that the creditors will no longer be allowed to pursue you for the debt that you owe to them anymore.

After filing bankruptcy and being discharged by the judicial court system, any debt you have declared in the filing disappears into the thin air. Now that you have become debt free, be prudent about your spendings and don't ever fall into debt like you did previously. Try to save as much as you can, and not spend all that you have made. Make sure you don't over spend what you can actually earn from your income. Bankruptcy should be taken frivolously. You should take this as a life changing event and change your ways of spending. Only spend what you can earn and try to save as much as you can. There is old proverb and it says "fool me once, shame on you; fool me twice, shame on me". Let your past experience of bankruptcy help you build a solid financial base in the future.

For additional information on bankruptcy, please visit our site at tofilebankruptcyornot.com

Article Source: http:// www.articlesbase.com/personal-finance-articles/what-does- bankruptcy-mean-to-me-2583076.html

Steve Sanchez has recently overcome the economic depression of 2008-2009 by declaring bankruptcy. Even though bankruptcy has devastated Steve financially and emotionally, Steve has rebuild his businesses in the last 6 months and he has not looked back since.

One of his project is to educate people on bankruptcy. Having gone through the ordeal himself, he has first hand knowledge of the pros and cons of filing for bankruptcy protection. Please visit his site http://ToFileBankruptcyOrNot.com if you want additional information regarding bankruptcy.