Personal bankruptcy is a constitutional aspect that explains a situation whereby an individual is not able to meet individual debt requirements. This status can only be declared by a federal or state court. Personal bankruptcy allows debtors to discharge all or part of their debts (English, Hicks & Gyles, 2003). Therefore, personal bankruptcy is a legal procedure that enhances reliefs on debts for some individuals. Filing of personal bankruptcy is a very complex and tedious legal process, it is essential that an individual seeks expert consultation before proceeding with the suit (NYCBAR, 2007). This is crucial as it will enhance accurate and complete processes.
There are two types of personal bankruptcy. The difference comes up from the nature of the bankruptcy and the extent of the relief that is acquired from the bankruptcy (Woodland, 2014). One of the personal bankruptcy initiatives allows an individual to avoid applying all debts completely. This option is usually explored by the individuals who usually who have very high debts and very low incomes. The income of such individuals may not sufficient to take care of their basic needs. The type of bankruptcy is the one that allows the filer to draft comfortable repayment plan for his debts. This allows the debtor to clear part or all the debt (English, Hicks & Gyles, 2003).
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Before considering to undertake personal bankruptcy procedures, there are various factors that should be taken into consideration. Declaration of personal bankruptcy is one of the most difficult decisions to make. This is because it is likely to have both short-term and long-term effects on an individual’s financial status and position (NYCBAR, 2007). Therefore, before starting filing a personal bankruptcy initiative, it is important for an individual to assess his personal financial position. This is through critical analysis of all assets, liabilities and individual expenses on sustenance. These are some of the aspects that influence the status of the bid for personal bankruptcy suits.
Filing a personal bankruptcy legal affair requires intensive legal activity. Therefore, for the process to be successful, it is important that an individual establishes a strong legal position before the process. This is through acquiring strategic advice from a competent attorney (English, Hicks & Gyles, 2003). These legal officers can assist in structuring an individual’s finances and then give appropriate advices on the most appropriate type personal bankruptcy to acquire. Legal advice is very crucial as it may assist an individual to ascertain whether taking a personal bankruptcy endeavor is the best solution to an individual’s financial concerns.
Before undertaking a personal bankruptcy declaration, it is important for an individual to consider consequences and future effects. This is because this is an initiative that is likely to attract a significant amount of lawyer fee and court costs. Besides, there are various issues that may be related to personal bankruptcy in an individual’s future financial transactions (NYCBAR, 2007). Therefore, it is important for an individual to consider future plans and financial prospects before undertaking personal bankruptcy initiatives. This may also render an individual powerless over personal assets and property. Personal bankrupt individuals must be ready to adhere to new financial and social climates (Woodland, 2014).
Declaration of personal bankruptcy should be the choice of last resort (English, Hicks & Gyles, 2003). This is because it puts an individual in a very bad financial position. Personal bankruptcy can make an individual’s assets to be under the control of the court until all the cases and law suits are completed. Personal bankruptcy is likely to commit an individual to a distressing financial future. Some of the consequences are long-lasting on an individual. This includes an individual’s ability to use money in the future. This is because it may delay or prevent foreclosure on possession of certain property (Woodland, 2014). On the other hand, declaration of personal bankruptcy is a process that is likely to consume a lot of resources. This is because it is a very costly and complex process which may lead to intensive financial and time expenditure.
