Declaring bankruptcy
Filing and declaring bankruptcy is one way to steer out of and obtain relief from current debts. However, to make the process efficient and effective, and prevent pitfalls, one must be aware of the different kinds of bankruptcy and the one that you might be eligible for. There are six main chapters of bankruptcy, chapters 7 and 13, which are mainly designed for individuals, chapter 12, which is also designed for individuals, but with an aim to provide debt relief for fishermen and farmers. Chapter 11 is for organizations or partnerships and Chapter 9 is for reorganization of municipalities. Chapter 15 is for resolution of debts for involvement of entities outside the US.
Declaring bankruptcy should be done only after comprehensively weighing its pros and cons, and considering alternate debt relief options. Things like consolidation, budget reformatting, refinancing and debt settlement much be considered before declaring bankruptcy. When your personal debt reaches a stage where you think that you might not be able to pay it all back, filing for bankruptcy can be considered. It should only be considered as a last resort, when no other debt relief options can work. It shouldn’t be considered just because it’s an easier way out.