North Americans generally enjoy one of the highest standards of living in the world. However, sometimes unexpected things happen to upset the apple cart. One day you can be cruising along, balancing your income with your outgo, when you suffer an injury or an illness and suddenly you cannot work. Maybe your business loses sales due to an economic downturn. Perhaps you are laid off or lose your job entirely.
No one can plan for such eventualities, and when they do it's usually very traumatic for all those involved. Because everything is so expensive, the average family needs to borrow money for basics like housing and transportation, and therefore needs a steady income to make monthly payments. Then too, credit is very easy to get and it becomes very easy to over extend. If a downturn comes, the whole thing crashes.
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It is not possible not to spend money. In the old days people might be able to subsist on a little plot of land, growing their food and providing for themselves. Today we must buy all our necessities with cash, and if we don't have cash, what in the world can a person do? Thankfully modern day bankruptcy offers a fresh start.
Because of certain stigmas, most people are hesitant to file for bankruptcy. They tend to wrestle with the decision, thinking that they will be publicly scorned and that they will have to give up everything. To help with this struggle, a person really needs to consult with a bankruptcy attorney who can offer unbiased and expert advice. Perhaps debt consolidation will solve the problem, but if bankruptcy is the way to go, here are some interesting and helpful points to consider.
If you own your home and are being sued, filing for bankruptcy will instantaneously stop the suit and also stop your creditors from garnishing your wages or putting a lien on your home. Another problem such as foreclosure of your home or repossession of your vehicle can be stopped as well. Usually a payment plan is drafted which will take care of mortgage arrears or past due car payments over time.
Usually you can retain your personal effects if you file for bankruptcy. Things like your house, your car, and your household goods are protected. This may be the only way out a tough situation, because without it creditors can sue you, tie up your bank accounts, garnish your wages, and take your house, leaving you with basically nothing.
The horrendous interest rate on credit cards makes it almost impossible for a person swimming in debt to recover. Simply paying the minimum might keep you in debt for the rest of your life, depending on how many cards you have. Bankruptcy can let you start over using credit in a responsible way.
It varies across the country, but in some cases only the person whose name is on the debts needs to file for bankruptcy. If your spouse is not named on a debt, he or she cannot be implicated. Of course things can get rather complicated when some things are joint, and some things are not, so getting the proper advice from your lawyer is very important. It may be possible that one spouse can retain a good credit rating which could greatly benefit the couple's ability to get on with life more quickly.
In spite of misgivings and fear of bankruptcy there are some refreshing things to consider. A big one is that the harassment you may have been subjected to from creditors and collection agencies will stop on a dime. All calls will be handled by your attorney just as soon as they are retained, and you will be able to answer the phone without fear.
If you are a renter, and not a homeowner, you don't have to worry that your lease may not be renewed. In many cases the landlord will not even be aware that you have filed, since they will probably simply rubber stamp the renewal without doing a credit check. A new lease might be a bit more tricky, but it's usually a less than pristine credit report that causes the problems rather than the bankruptcy. In fact you might have an advantage over a person with a poor credit rating and lots of debt, since you will have no outstanding debt.
In a strange twist, you will probably find that you can start to build up your credit worthiness very soon after the bankruptcy has been discharged. Your new status as a person with little or no debt, and presumably a half decent income, makes you a very attractive potential customer to lenders and financial institutions. After all, they exist to lend money and charge interest. Just make sure that you borrow very, very responsibly and don't fall prey to the unsecured credit card offers that will surely come your way.
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