Effect of Bankruptcy
Bad Debt Consolidation by splinder
Filed under Bankruptcy
Bankruptcy filing can help you to get rid of debts. However, the effect of bankruptcy can take time to repair. Irrespective of the type of bankruptcy you are filing, it will affect your credit score. It will take years to repair your credit and it may take up to seven years for you to get a fresh loan. Apart from financial effects, bankruptcy can also affect you socially and legally.[br]
Financial Effect of Bankruptcy
Once you are declared bankrupt, most of your assets will be taken away by the trustee. Your debts will be cleared once your assets are sold, after the one year insolvency period is over. You can start a new life, but with financial restrictions. Firstly, the credit available to you will be severely limited. If you want to start a business, you have to get permission from the bankruptcy court. You may not be allowed to hold public offices. You will not get credit from non-traditional sources. If you can get credit from other sources, the interest rates are likely to be prohibitively high.
Social Effect of Bankruptcy
Besides the social ostracism that follows bankruptcy, when you apply for a new job, for any financial assistance or start a new business, you may need to declare that you have filed for bankruptcy. There are psychological effects too; a bankrupt person is subject to mental pain, extreme stress and feelings of failure and guilt. The uncertainties caused by the bankruptcy can further increase the debtor’s stress level. Often people find it difficult to begin a new life under these conditions.[br]
Once they have filed for bankruptcy, many people are shaken and a sense of insecurity creeps in. These people question the trust they have in themselves, in others and the whole world itself. Their self-esteem suffers in the process and in extreme cases, the fear of failure can seriously hamper their perception of their abilities. Their confidence, coupled with social embarrassment can seriously hamper their future productivity and career.
Although it is natural for people trying to have these emotions, bringing these emotions to a conscious level can reduce their fear of loosing control. Being aware of the effect of bankruptcy is the first step to freeing oneself from its effect.