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Bankruptcy (As A Last Resort)

Bankruptcy laws provide a legal procedure by which a debtor obtains relief from the demands of his creditors. At one time, bankruptcy was a cause for personal shame but more recently, it has become more acceptable in the eyes of the public, but only as a last resort.

Many people panic when they get behind on their debt, throw up their hands, and try to forget about it. But the debt does not go away. Even so, bankruptcy is not always the best course of action when trying to combat debt and bad credit.

Bankruptcy remains on your credit history up to ten years and makes it hard to obtain additional credit. Certain employers may also require an examination of your credit history as a prerequisite for employment, meaning that a bankruptcy could cause you to lose out on the perfect job.

As the law now stands, you may have to go to credit counseling before your bankruptcy is granted and you may have to take a course in financial planning.

Before you file for bankruptcy, try working with a credit counseling service that can help you create a budgeting plan. They can also negotiate with your creditors and bill collectors. Most creditors are willing to negotiate smaller payments until the outstanding debt is paid in full, if you act in good faith.

There are more than one type of bankruptcy filings so, if you have to file, make sure you chose the one that is right for you. Although you can file yourself, it is not a good idea. If you don't file correctly, you may place yourself in deeper jeopardy and have a harder time trying to restore your credit history.

Although the purpose of bankruptcy is to give a debtor a fresh start by eliminating the pressure of debts that cannot be paid or stretched out in a repayment plan, some debts cannot be dismissed by filing bankruptcy.

If you own property, you may be required to sell it to pay creditors under chapter 7, or if you don't have property to sell, you may look into filing chapter 13. Your attorney can tell you which plan is best for you.

Not all attorney's practice bankruptcy law and since laws have changed and become more complicated, it is always prudent to hire a good attorney who specializes in bankruptcy law, if you have to file.

It is considered fraud, punishable by law, to spend lavishly just before filing bankruptcy, thinking that this new debt will be dismissed, and if a certain debt is not listed in your petition, it will not be discharged.

Before you file, think about how it will affect those around you, your family, friends, or business associates. One or more of them may have to pay the debt that you are discharging.

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