Financial Bankruptcy – How to save yourself.

The individual is often exposed to the interaction of complex financial mechanisms which do not always place one at an advantage. The desire to satisfy the basic needs of life often exposes the individual to taking options that most times leads to them becoming debtors to financial institutions. At the zenith of all this, the individual may have to seek debt consolidation as a remedy; however if disqualified by prevailing factors, the individual is then classified as financially “bankrupt”.

Bankruptcy simply refers to a situation where an individual is denied and also unable to secure any more forms of credit life-lines by one’s bankers. Bankruptcy actually places the individual in an embarrassingly “small space” since the person can no longer operate any bank account until given a clean financial bill. In financial circles, bankruptcy is considered an essential tool for “establishment health” as it tends to deal with the technicalities involved when individuals borrow fresh loans to pay-off a batch of former loans when it has been established that the proposed current asset portfolio cannot back-up the loans already obtained or being sort for.

The initial stages of bankruptcy begin with the inability of the individual to settle creditors. The bills continue to pile and despite the sincerity of the individual, all efforts put into remedying the situation prove abortive. The individual upon the expiration of the grace-period being offered by creditors who follow with efforts put in motion to get the individual classified as being bankrupt. This form of bankruptcy is termed “involuntary bankruptcy”. Creditors tow this line of action in an effort to recover a portion of what they are being owed in addition to conforming to institutionalized provisions on internal and legal issues.

Also, the individual having viewed the circumstances could personally file a bankruptcy petition. This type of bankruptcy is then termed “voluntary bankruptcy”. As sad as one could imagine, bankruptcy could be the only way an individual can handle debts that one cannot pay. All assets owned within this period have to be forfeited to aid the settlement of debts owed. However, bankruptcy frees you from all debts and also provides you an opportunity to build your credit status afresh usually after a period of one year.

Some of the ways to avoid going bankrupt are outlined as follows:

1.     Obtain quality financial counselling.

2.     Develop and adhere to a spending plan.

3.     Avoid taking on more debt.

4.     Talk and address issues extensively with your creditors.

5.     Consolidate your debts.

Above all, get informed in all facets on issues related to bankruptcy so as to avoid all pit falls and thus maintain a healthy financial status. Cheers.