While many do not know this prior to making their decision to file for bankruptcy, a discharged bankruptcy comes with serious consequences in both your personal and professional life.
For a lot of people with a lot of debt, personal bankruptcy might seem like a popular option, particularly when debt and credit collectors are calling and making harassing remarks. While bankruptcy might promise to be an easy fix to the calls and sleepless nights, you should never hurry into bankruptcy. Although it can end the calls, it frequently proves to be the biggest mistake that prior bankrupt borrowers ever make.
Personal bankruptcy comes with serious consequences, both to your personal and financial life. Here are some of them:
Since bankruptcy is essentially a liquidation of assets, filing for bankruptcy puts your assets at risk. This includes properties, shares, personal valuables. These items can be sold by the trustee to settle outstanding debts.
While current assets are obviously at risk, a lot of people do not realize that future assets such as inheritance money can also be subject to claims by creditors.
Besides the above, the impact of personal bankruptcy affects the individual’s future credit status too. An undischarged bankrupt cannot act as a company director and would not be allowed to obtain further credit till his case is dismissed by the court.
Taken one step further, a bankrupt individual cannot have a direct or indirect management position in a company and cannot become a counselor, magistrate, MP, or an Estate Agent. While this might not seem like a big deal, bankrupt individuals cannot hold positions as school or college governors and also cannot work at security firms or in the civil services.
What is likely the harshest impact of personal bankruptcy is something that comes after the bankruptcy notice is advertised. Given the public nature of bankruptcy, the debtor’s name and personal business dealings are in jeopardy. Unlike companies who can operate under different trade names, individuals have just one name. And since bankruptcy are publicly available, anyone can access the details of your bankruptcy.
Personal bankruptcy will have an impact on your reputation. With your financial affairs being examined in an open court, the process will not only prove to be extremely stressful, but others have found the whole experience rather humiliating.
Apart from all the above, bankruptcy also plays havoc with the present financial condition of the debtor. He would have to incur huge court and insolvency fee for the entire procedure.
If you are seriously considering bankruptcy as an option to clear your personal debt, review as much information as possible before meeting with a trustee. There is plenty of information available on the matter on the internet.