Personal Bankruptcy

Personal bankruptcy is a type of bankruptcy in which all the properties of a debtor are declared to be bankrupt. It is the most serious form of bankruptcy for any debtor. A personal bankruptcy can be declared by the debtor or the creditor. If you are a debtor, you should think carefully before declaring bankruptcy. Declaration of bankruptcy may seem like the only answer but may be a bad choice in the long run. There are many positive and negative aspects to declaring bankruptcy.

Reason for Declaring Bankruptcy

Declaration of bankruptcy may not be a good decision for you, unless it is declared by a court under the petition of a creditor. If someone has filed personal bankruptcy against you or you have declared yourself as bankrupt, all of you credit cards and luxury possessions will be lost unless you satisfy your debts with the creditor. It will be very difficult for you to purchase new properties after you have declared bankruptcy because record of the bankruptcy remains on your credit report for 7 to 10 years.

Bankruptcy may embarrass you as your name will appear in a local newspaper as bankrupted. If you have filed bankruptcy with a creditor, collection actions will be stopped by the court. Your properties and business activities will be shielded even if you have filed with an attorney.

Declaration of bankruptcy can be advantageous for some debtors. If you believe that your inability to pay your debts will be ongoing, then it is better for you to declare yourself as bankrupt, perhaps saving some of your property in the process. Though most of your debts will have been declared insolvent, student loans and back taxes will be exempt. Your home, cars and some essential properties may be exempt as well, depending on the circumstances surrounding your bankruptcy.

Declaring bankruptcy is not the end of the world. It's sometimes a necessity and provides an opportunity to begin over again when the bankruptcy is complete.