personal

Disadvantages of Personal Bankruptcy

Personal bankruptcy is considered as an option to filing for complete insolvency. This is because it allows you to give up a portion of your property in order for some of your debts to be discharged. It is commonly known as the chapter 7 personal insolvency law. In many states it is filed through a licensed trustee who practices bankruptcy law.

As you look at the bright side of having your debts discharged, you must also bear in mind how you will negatively be affected by personal insolvency. To begin with, your image will suffer. This is because you will be classified in the list of bankrupts. Your credit rating will also be negatively affected as you will lose the points gained earlier. Once this happens, you will find it hard to borrow as any lending firm will put you under a lot of scrutiny.

Personal insolvency is also associated with loss of leadership power. This means that you will not be able to hold a leadership position especially in a company. You cannot be a company director while under insolvency. You may also lose out on employment opportunities as potential employers will be very careful when considering you for any given post.

Despite all the bad sides of personal insolvency, we cannot overlook the fact that it has helped over one million people to get over their debts in a very short period of time. Note that unlike in other forms of insolvency, personal insolvency gets you discharged within a period of 12 months and opens the doors to your financial freedom.