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Taking The Financial Steps: Personal Bankruptcy
By Rolf Joho
Personal differs to broader scenarios as it is applied on an individual level. It can be explained according to one s financial situation whereby financial trouble can be managed by declaring personal bankruptcy. There are of course different levels that lie within personal Bankruptcy. Once these have been dissected one can hold a better grasp of the subject and can therefore take the steps to determine one s financial state. The following will explore some reasons that cause financial difficulty, available options, declaring personal as well as the pros and cons of personal bankruptcy. Some circumstances, such as: unemployment, house payments and higher purchases, medical bills, credit card debt etc, can cause a loss of control over finances. This can lead to personal bankruptcy. Financial difficulty is not easy to come to terms with but it is the first step to take when deciding whether one should declare personal bankruptcy. The next step is investigating what personal option is best to take. Awareness of Chapter 7 and Chapter 13 is key. The former involves a liquidation of assets; here outstanding assets are distributed to creditors. In a short time (roughly six months) one can be free of unsecured debt. While this sounds like an attractive choice it is only an option if one

meets certain criteria. Some of these include having a substantial income and seeking financial advice (which adds to the outgoing costs). The personal Law has made it more difficult to apply for. This law works alongside Chapter 7 Bankruptcy, to ensure that is it not freely available to those involved in personal bankruptcy. The latter involves a reorganization of ones debt. Here one has the option pay off all of ones debt over a longer period of three to five years. One s financial responsibilities (such as higher purchase, credit card, house payments etc) become easier to pay through a plan of payment. This includes regular (minimal) payments over a specified time period. After which any remaining unsecured debt is dismissed. Once one has a grasp of the financial situation at hand one can decide on the most appropriated course of action. If financial help is sought it is important to realize that this will add to the financial burden, however financial advice may be the only way to proceed. The Pro s and Con s Of Personal Bankruptcy The pros of personal allow one to gain control of ones finances and in some cases wipe the slate clean. Whilst this removes the stressful situation it may cause people to be irresponsible with their finances, as they know that they can always declare personal and start again.