Many a times you read about notices issued to the public, informing them about the bankruptcy of a certain organization or company. The intention behind making this public announcement is not to deepen the sense of shame of the person or the company, but is simply a legal obligation.
Anybody, whether a company or an individual can go bankrupt. This happens when the bankrupt person or organization cannot clear their debts. There are multiple reasons why the company or the person can fall into this situation. Improper financial planning, spending on unnecessary items or loss of source of income can be some of the reasons for the bankruptcy.
If you go bankrupt, file your bankruptcy under Chapter 13. Chapter 13 permits an US resident to reorganize and restructure their finances. It allows you start afresh and get your finances back on the track. The bankruptcy court will supervise and authorize the entire process of overhauling your financial situation.
While filing for bankruptcy under Chapter 13, you have to draw up a plan of action meant to pay your dues within the next 3 to 5 years and submit to the bankruptcy court. You should clear your dues as much as possible at frequent intervals. Filing under Chapter 13 will protect you against the undue pressure exerted on you by your lenders to pay your debts.
The only drawback is that your bankruptcy will affect your credit score. It is retained for the next 10 years. So you might find it difficult to get any credit during that time.
Tags: Chapter 13, Chapter 13 Bankrupt