While many do not know this prior to making their decision to file for bankruptcy, a discharged bankruptcy comes with serious consequences in both your personal and professional life.
For a lot of people with a lot of debt, personal bankruptcy might seem like a popular option, particularly when debt and credit collectors are calling and making harassing remarks. While bankruptcy might promise to be an easy fix to the calls and sleepless nights, you should never hurry into bankruptcy. Although it can end the calls, it frequently proves to be the biggest mistake that prior bankrupt borrowers ever make.
The impact of personal bankruptcy can have serious effects on your current and future financial position. Let us see how:
Since bankruptcy is essentially a liquidation of assets, filing for bankruptcy puts your assets at risk. This includes properties, shares, personal valuables. These items can be sold by the trustee to settle outstanding debts.
While current assets are obviously at risk, a lot of people do not realize that future assets such as inheritance money can also be subject to claims by creditors.
In addition to the sale of assets, the impact of personal bankruptcy includes harmful records on your credit bureau. Bankruptcy will impact your intentions to act as a company director and obtain non-personal credit for the rest of your life.
Another professional downfall means being exempt from holding an indirect or direct management position in a company, nor can you hold a position as a counselor, magistrate, MP or Estate Agent. A little closer to home, you also cannot serve on a school or college’s board of governors, not can you seek employment at security firms or in other civil services.
The impact of personal bankruptcy has even harsher realities, particularly after the bankruptcy order is published locally. This notice can potentially have an immediate and earth-shattering impact to the individual’s name and personal dealings. Unlike corporations that can take on different trade names, individuals are unable to do so, meaning they cannot hide behind a different name the order can potentially follow them forever.
Personal bankruptcy also affects the debtor’s reputation. The entire procedure of declaring bankruptcy is very stressful. At times, the financial affairs as well as the conduct of the debtor are examined in open courts thus proving to be a humiliating affair for the debtor.
Apart from all the above, bankruptcy also plays havoc with the present financial condition of the debtor. He would have to incur huge court and insolvency fee for the entire procedure.
If you are seriously considering bankruptcy as an option to clear your personal debt, review as much information as possible before meeting with a trustee. There is plenty of information available on the matter on the internet.
Chris Blanchet is the author of the Personal Finance e-book
Help Fix My Finances, which also serves as the premise for the Members Only website of the same name. His blog can be found at How To Repay Debt
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