Contrary to popular belief, bankruptcy is not evil. It is a form of legal protection mandated by federal law. With it, a debtor can avoid harassment from creditors and collection agency. They can also prevent garnishment wage (withholding wages) and repossession of assets such as a house or a car.
Debtors also have some options how to settle their financial obligations. The bankruptcy process may remove all these debts, or the person in debt can get help in restructuring the loan. This way, it is easier for them to make the repayments.
Either way, it still does not remove the fact filing for bankruptcy is stressful, and it can have a profound effect on a person’s life.
How Can Bankruptcy Affect You?
Bankruptcy can affect a person’s credit score. The record can stay in the report between 7 and 10 years. Debts can remain as well even after the payment plan is over for those who filed for chapter 13. Simply put, credit scores can drop significantly.
It may then affect your ability to secure a better financing for a home or business. The process can also adversely affect a person’s physical health. In a study published in 2017, older women who filed for bankruptcy often reported a much lower self-rated physical health.
Psychological and Emotional Effects
There was also a close association between depressive symptoms and the procedure for women around 40 years old. It may, therefore, increase the risk of premature death.
It Also Affects Relationships
Bankruptcy may also make a relationship more complicated. At least 64 percent of those who file are married couples. The filing does not make the other spouse immune to creditor harassment or for protection against repayment of the financial obligations.
It is a Serious Matter
Bankruptcy requires careful considerations. As much as possible, debtors should explore alternatives to pay off creditors. One of these is to sell a business here in Salt Lake City. With the help of a business broker or an advisor, you can find somebody to take over existing debts.
Although it is hard to sell a struggling enterprise, it is possible.
Everyone goes through financial trouble. What is important is to know there are options available to end it and turn things around.