There may come a time when you won’t have the ability to commit to your financial responsibilities like unsettled debts. The big problem here is that you might be required by the law to pay off your balance. You try to settle things that will seem equitable to you but your creditors don’t see themselves benefitting from your proposal. When push comes to shove, you may have the choice of declaring bankruptcy.
Declaring bankruptcy is the process of being recognized by the law as financially incapable of paying debt and other financial commitments. This protects the debtor from having to pay all his outstanding debt prior to his declaration.
Bankruptcy in Singapore
A year ago, 2,000 people in Singapore have declared bankruptcy. This is something no Singaporean or any person in the civilized would want to end up in when they grow up. Truth be told, it is a convenient way to relieve yourself of big problems that will only grow bigger. When you declare bankruptcy, you’re basically swearing to the law of the land that you, as a person with free will, cannot pay any debt that you have.
Once all the formalities have been dealt with, you’re officially debt-free and not accountable for any payment of prior debt or interest.
Here is the catch. By declaring bankruptcy, you are actually trading one problem for another.
Legally bankrupt people are treated like social outcasts. No financial institution would trust a bankrupt person. No transaction will look safe when it is done with a bankrupt individual. Rent, mortgage, credit, loans, and even fixed income are virtually unachievable once you’re bankrupt. If you have assets, the law will put a cap on it and offer the excess to a trustee, who can sell your assets to pay your creditors.
Understanding How Debt Affects Your Credit Score
Adding salt to the wound is the strain this social stigma puts on your emotional ties. Your family and loved ones may start distancing themselves from you because of this law-enforced tainted reputation.
This is why you have to think deeply first before filing for bankruptcy. Here are some questions you have to ask yourself first before you commit to the deed
Have you talked to a debt management professional about your filing?
Debt is a very common matter in the world of finance and economics. This is also the least understood aspect of it. Debt management professionals, or debt advisors, exist to help you deal with your debt with a rational mind, a working body, and strong heart. The main service your debt advisor will offer you is a way to legitimize your bankruptcy.
If bankruptcy is really the solution you’re trying to find, you debt advisor has to make sure first that you can actually pass as a bankrupt individual. He will have to snoop into your finances for potential supporting evidence. He will also teach you what will happen to you once you go bankrupt and guide you through the way for a certain amount of compensation.
Have you considered other options that will help you with your problem?
Filing for bankruptcy is not always the best solution for big unsettled debt. Are you sure that your debt is even beyond repair? You have to check first if there are reasonable and achievable solutions that will not only save your reputation but also teach you a thing or two about working hard to pay for the losses you incur.
Once you actually pay your debt off through all the obstacles, you can actually gain a better reputation. You can show them that you can pay off a huge debt just by working hard. Remember, some people end up in a worse situation when they encounter debt problems.
If you always tell yourself that you’ve done everything but still couldn’t pay the debt, most likely you haven’t done everything yet. There are so many ways to earn money and they don’t even have to be illegal. Some are questionable while others are just embarrassing to do, but you have to stay focused on your goal, which is to pay the debt.
Do you understand the drastic effects of filing personal bankruptcy on your life and your relationships?
If you are ready to literally restart your life, not just financially, then bankruptcy might be just the right thing for you. But if you value your relationships and just love interacting with people and building a bigger and tighter social network, you must not even think about filing. Despite being made to help people critical financial problems, filing bankruptcy is just a legal way of telling the world that you can’t be trusted with money. The disgrace it will put on you and your family can grow unbearable and you may have to accept that you will lose your credibility and integrity as a cooperative human being.
At the end of the day, it will still be your choice. If you still want to know more about bankruptcy, it’s wise to contact a professional that can help you through the process.