Numerous people, probably in the millions, are facing different kinds of debts at the moment. This may be caused by various factors but mostly due to the use of credit such as in the form of credit card and loans. So many people have somehow gone overboard in their use of the plastic and in taking out loans that led them to suffer from debt.
Financial troubles can indeed cause headaches, stress and anxiety to people generally affecting not only their mental health but even their physical health. Sometimes the negative effects on a person’s overall health can lead them to decide to just declare bankruptcy as a way to get out of their problem. But is this action really the fastest solution available to people facing huge debt?
Debt advisers in the USA don’t think so. To them, declaring bankruptcy should be considered as the last option. This is because making the move would mean letting go of all your personal possessions, income and properties including your beloved home. In addition to that, it will also have a big impact on your credit history.
In the USA, bankruptcy rules state that is a person has gone bankrupt and eventually earns money, it could still be taken away from him or her in order to pay past debts. Winning a huge sum of money such as from a lottery does not mean the debtor can keep even a certain amount from the winnings. This applies to people facing huge debts but not to those who owe only a small amount.
In terms of your credit rating, declaring bankruptcy can mean you being blacklisted for up to 15 years. What happens then is that you can no longer apply for new credit within that period. Again, this applies to those who owe a huge sum of money from banks and lenders. Those facing debts that are small and continue to earn a regular monthly income, there is a possibility that the court will agree to set up an administration order requiring debtors to pay their creditors on a monthly basis.
So just in case you want to declare bankruptcy, what then are your options after that? Do you have limitations when it comes to employment and obtaining new credit?
For those bankrupt people, a major requirement is to declare their financial status whenever they apply for new credit notably when the amount involved is more than $300. You have to do this even if you are applying together with a friend or another person for that matter. If you’re planning to put up a new business using another name, this should also be done. In other words, you have to inform those you partner with about your previous issue.
So the big lesson to learn here is to always repay your debts on time. Never wait for the due date or delay payment if you have the necessary funds. Loans including the short term unsecured ones such as the cash advance and payday no matter how small the amount involved should also be paid on a timely manner.