An individual can file for bankruptcy because of some reasons. There are those who will file for it simply because they have lost a job; others will file for bankruptcy because they fell ill all over a sudden. For some individuals, there is a possibility of filing for bankruptcy because they might have overstretched themselves and they want to start afresh all over again.
Whichever the motivation of filing for bankruptcy, there are some important facts that you should have or be aware of before you commit yourself to the process. In this article, we highlight the basic facts that one should be aware of, before filing for bankruptcy. They include:
It will not solve your financial problems
This is the most important fact that you should be aware of. Before you enter into the process of wanting to be declared bankrupt, it is very important to be alive to the fact that filing for bankruptcy or being declared as being bankrupt will not solve your financial problems. What bankruptcy will do is that it will enable you clear your debts, but this is a temporal reprieve as you have not dealt with the cause of your financial downfall. Even though you might not have been entirely responsible for your financial downfall, the chances are that there are financial situations and decisions that you could have handled differently. Therefore besides the thought that filing for bankruptcy will give you a reprieve, you are encouraged to adopt better spending and saving ways. This will go along way in ensuring that you regain your initial financial position.
You risk losing some of your belonging
Most people who undertake the bankruptcy process are not aware of this fact. When individual files for bankruptcy, there is a possibility that there will come a time during the process, that you may be required to sell your assets. This happens when you are supposed to sell them so that you pay off all those that you owe.
At times the process can be complicated than you anticipated
Before you file for bankruptcy, it is important to be aware that the process might become harder and complicated than you though. This is because the laws that govern the entire bankruptcy process change on a regular basis. Be aware of the fact that the entire process can be harder than you initially anticipated. Over the years, the process has become more complicated and rigorous than it previously was. Nowadays there are many steps that you will have to go through before you conclude the process. Initially, it was possible for one to go through the entire process alone but due to the complication of the bankruptcy laws, the process has become so complicated that you have to hire a lawyer.
The process brings about psychological negativity
The chances are that when you have filed for bankruptcy, the entire process will leave you with a negative psychological feeling. The process makes one feel like he/she is a loser due to the inability to deal with your debts. The other negative thing is that at the start of the process you will feel like it is the best thing to do but on concluding the entire process you will have an awful feeling.