Personal Bankruptcy Factors to Consider BUS 215 Week 2 - Assignment

Content type

User Generated

Type

Essay

Uploaded By

Unfrro Pu

Pages

Rating

Personal Bankruptcy

Sometimes individuals reach at a level of financial difficulty that they get no other way but

to declare bankruptcy in order to avoid loan payments. There might be situations and

unforeseen circumstances where declaring bankruptcy might be logical and only choice left

for people. Although filling for bankruptcy might have some benefits, it also has its own

consequences that should be analyzed before deciding to declare bankruptcy.

Considering benefits and consequences, declaring bankruptcy is not easy decision.

Bankruptcy may remain on credit file for many years, may result in loss of assets like home,

car of savings etc. Anyone thinking to file bankruptcy should consider following factors.

(King & Carray,2013)

(i)Personal Circumstances:-Any one thinking to file bankruptcy should carefully evaluate

his financial circumstances and try to figure our ways to pay back his debt. There might be

number of ways to defer, negotiate or refinance loans or mortgages. For example payments

of student loans can be deferred for some period of times, the interests rates of credit cards

can be lowered through negotiations and mortgages can also be refinanced. There are

many credit card/debt counseling agencies that can help people in negotiating and

reducing interest rates, helping in managing payments. Anyone thinking to declare

bankruptcy should consider all these options before filling bankruptcy.

(ii)Difficult to Obtain Credit in Future:- Declaring bankruptcy can make it very difficult to

obtain any kind of credit in future. Some people believe that filling bankruptcy under

chapter 7 will wipe out their previous credit and will make it easy to get new credit. That’s

true to some extend as some credit card providers that may provide credit cards to such

people. However most of credit card providers or money lenders will not consider such

people who have bankruptcy on their credit files. (Kapoor & Dalbay,2007) In Case of

1 | P a g e

Bankruptcy filed under Chapter 13 the money lenders will not provide any loans or credit

cards until bankruptcy is discharged and credit file is free from any recent negative records.

(iii) Declaring Bankrupt might be costly in terms of Court and Lawyer fees:- Declaring

bankruptcy is not an easy process it might involve Lawyer who will asses and figure out

which type of bankruptcy can be filed. The eligibility to declare bankruptcy depends on

“amount, types and age” of debt. It can be costly in terms of court and lawyer fee. Further

you may also have to pay the cost of taking money managements courses. This all will

provide ten years of debt relief with bad credit records for ten years.

(iv) Declaring Bankruptcy may result in losing your Assets:- Declaring the bankruptcy

will put assets and debt under control of bankruptcy court . it means anyone wishing to file

bankruptcy can’t sell his assets. Some of the assets might be surrendered to trustee who

may sell these assets to raise money to pay off some of the debts. This may also include

personal home or any other assets. (King & Carray,2013)

(v) Impact on Future Career prospects:- Although organizations are prohibited to decide

some one`s eligibility for job on the basis of their credit history. But filling for bankruptcy

may have negative impacts on future career prospects. Some organizations may not

consider such candidates for some specific types of job roles like director of business as it

may shatter the customers and investors confidence on company.

(vi) Filling of Bankruptcy may have psychological effects:- Filling of bankruptcy ma

have psychological effects due to depression and family troubles. Many people may have to

face divorce due to bankruptcy. Many people may feel helpless and unsuccessful that may

result in depression and other psychological problems.

2 | P a g e

Unformatted Attachment Preview

Personal Bankruptcy Sometimes individuals reach at a level of financial difficulty that they get no other way but to declare bankruptcy in order to avoid loan payments. There might be situations and unforeseen circumstances where declaring bankruptcy might be logical and only choice left for people. Although filling for bankruptcy might have some benefits, it also has its own consequences that should be analyzed before deciding to declare bankruptcy. Considering benefits and consequences, declaring bankruptcy is not easy decision. Bankruptcy may remain on credit file for many years, may result in loss of assets like home, car of savings etc. Anyone thinking to file bankruptcy should consider following factors. (King & Carray,2013) (i)Personal Circumstances:-Any one thinking to file bankruptcy should carefully evaluate his financial circumstances and try to figure our ways to pay back hi ...
Purchase document to see full attachment