A person is financially insolvent when they are unable to fulfill their financial obligations to the creditors. Bankruptcy occurs when they decide to declare themselves insolvent in the court. The process of bankruptcy includes the measurement of assets and liabilities and their implications.
Why Should You Avoid Bankruptcy?
Negatively affects your credit score-
Many companies calculate a credit score, which is a number falling between 300-850 points that define your creditworthiness. They check criteria like credit history, the number of accounts, frequency of payment, etc. When you file for bankruptcy, the credit score falls by 200-250 points. Thereby making it difficult to take new loans.
It does not waive all loans-
People file bankruptcy thinking that they can get rid of the entire loan. However, this is not true at all. Several loans like student loans, child support, alimony support, and many more are not easy to get rid of. Along with the court fees, you would have to pay other expenses like the lawyer’s fee. Moreover, the sum of money is not less rather huge. Hence, you can avail of debt management services in New York to be debt-free in New York. This is more economical than any other way.
Confiscation of property –
The procedure of bankruptcy involves the measurement of all your assets to determine which ones can pay the liabilities. Therefore, the court takes away anything that the court deems to consider relevant and can offset your loan. As a result, all your real estate properties, including your home are taken away from you. Additionally, your bankruptcy trustee gets an equal share of ownership in all the properties. They also get a right to manage them. Instead of this, you can opt to be debt-free in New York and get counseling services.
Hampers Professional life –
You are not allowed to work in certain industries after you file for bankruptcy. The policies may differ to an extent, but areas such as real estate, financial planning, stock trading, and others are blocked. You are not only allowed to work, and the license is taken away as well. Also, about forty-seven percent of the HRD heads to conduct a credit check. So, if you are looking for a new job, bankruptcy will make it even more difficult for you.
Restrictions on lifestyle–
You can perform actions that require spending money after the trustee grants permission. One has to apply for the same with a fee of about $150. It will only be legitimate to spend a large sum of money without flouting the terms of the agreement. As a result, you cannot make autonomous decisions. Look for other means to be debt-free.
Affects your financial credibility for life–
Bankruptcy stays on your credit report for at least 2 to 5 years, even more depending on the type of bankruptcy filed. Anyone will hesitate and doubt your credibility before giving a loan. Also, the National Personal Insolvency Index adds your name for life. It can damage your reputation. To be debt-free in New York, you can look for other ways.
No additional savings–
One may invest money in assets to get additional income and thus might earn a profit on the same. There are high chances that using these assets, windfall gains, or inheritance, you can pay your liabilities. So, are you still thinking of filing for bankruptcy?
You can lose all your inheritance–
If you are planning to file bankruptcy and take any sort of inheritance, do not bother because you are not getting it! It confiscates any assets that can settle the liabilities. So, you can not trust the trustee for any relaxation during the process. Since it uses all the means which can reduce your debt in paying them off.
The burden of heavy loans forces people to file for bankruptcy to avoid the stress and anxiety due to it. The hope for a fresh start and reduction in pressure indulges them in this. However, they do not realize that the process includes many restrictions. They forget that there are debt management services in New York that can help them avoid this cumbersome procedure.