For many years, people have been filling for bankruptcy when they are in serious financial problems. Most of these people are heavily indebted. Filling for bankruptcy is the last thing a person can do in his or her life due to the shame and stigma associated with it. Owing to the plenty of misinformation that has been circulating in the neighbourhood and online about this state, anyone who is considering bankruptcy is advised to get the right information. The following are some of the essential facts about bankruptcy that will help you in making an informed decision when filling for bankruptcy.
It lasts for three years
Even if this is true, bankruptcy can be extended to five or eight years especially if the trustee is not provided with the required information for the first three years. Failure to fill in the required paperwork when someone is bankrupt can also lead to the extension of bankruptcy.
Filing for bankruptcy can make you lose some assets
Being bankrupt can make you lose some assets, but you cannot lose the general hose items and furniture. However, someone can lose his or her house if it happens to have a lot of equity in your property. Again you can also lose your car if it has a high asset value. Your business will also be considered as an asset if you happen to be self-employed. Getting some pieces of advice from an expert can help you in protecting or safeguarding some of your assets once you are declared bankrupt.
Filing for bankruptcy will make you lose your business
A bankruptcy trustee is supposed to sell some of your assets and then give that money to the creditors. The asset value of your business will determine if you will lose your business. For instance, a plumber cannot lose his old hand tools if their net value is very small. This means that his business will continue running.
You might lose your job once you file for bankruptcy
There are some professionals that someone cannot do when he or she is bankrupt. This will mainly affect those people who are interested in moving to a different field or profession. For instance, you cannot join the police once you have been declared bankrupt, but those who are already in the police force cannot be affected as long as their bankruptcy was not as a result of illegal activities or fraud.
You might not lose your house when you go bankrupt
You will retain your house if there is little equity in your property but you will be expected to continue paying your mortgage for the bankruptcy term. Your house will be re-valued after three years to determine if there is any capital gain.