What You Should Know Before Declaring Bankruptcy

declaring bankruptcy is never a good proposition. The word itself influence ominous thoughts. You have probably heard media stories about major corporations going bankrupt and it leaves you questioning what sort of financial trouble one is in to make that kind of declaration. How do you determine the right time to throw in the towel and declare yourself bankrupt? If you are experiencing some personal or business financial troubles, you need to plan ahead before you make that declaration, lest it will haunt you for good.

Assess Your Financial Situation First

This should be an obvious tip before you declare bankruptcy. However, those who are battling heaps of debts often become irrational and desperate. This is a deadly combination. You need to sit down with a relative or a financial adviser if you have one. Give your current financial situation more thought. You need to make an inventory of your liquid assets from your real estate investments, stocks, bonds, savings accounts, vehicles, and retirement funds. Calculate the total for all of these assets. Unless your debt is higher than what you can afford to pay, based on the calculated assets, then you should hold off on declaring bankruptcy.

You should never look at bankruptcy in a casual manner. It is not a cure-all way out of debt, unlike most people think.

What Declaring Bankruptcy Means

Simply put – when you declare bankruptcy, it legally protects you from creditors due to your inability to settle your debts. This legal status is achieved if you can showcase proof of your assets being in lesser value than your total debt. In most cases, bankruptcy lasts for a year. After that one-year period, the debt is often discharged and you are no longer obligated to pay for your debts.

The court will decide whether to approve the filing of bankruptcy or not. Once the bankruptcy is approved by the court, however, all of your assets will be frozen. The court will take full control over your money and other accounts. They will also conduct an interview prior to communicating the bankruptcy case to your creditors. Your assets will be sold by the court to either pay off the remainder of your debt or write off your debts altogether. This agreement will vary depending on what the court and your creditors have discussed.

It is a scary thought to admit you’re in a deep level of debt that it is hard to get out of there. The decision to declare bankruptcy is scary but oftentimes necessary. But this is what the bankruptcy law is for – they are designed to protect consumers, not just creditors! A good lawyer can help you sort out the kinks in your finances and start anew. This could just be the fresh start you need.

To give you professional advice on declaring bankruptcy and whether or not this is the best option for your financial situation, visit http://www.debthelpline.com.au/debt-solutions/bankruptcy/. These professionals know the in’s and out’s of debt relief and can help provide the best solution to improve your financial standing.