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In a global economic climate where people are losing their jobs every day, the amount of debt in countries like America and Britain is still on the increase. Many people seem to think that if they cannot afford to pay their debts then bankruptcy may relieve them of the need to do so. More people are looking at bankruptcy as a way of dealing with debt and don’t seem to realise how much of an effect such a step could have on their lives.
The law is changing in regard to bankruptcy, where before personal bankruptcy cases would be heard under Chaper 7 of the bankruptcy laws, where the slate is virtually wiped clean once assets have been sold to try and meet the debt, more cases now go under Chapter 12, which does not have this option. The law only applies to things like loans, mortgages and credit card or store card debt, it does not apply to money owed on student loans, council tax, income tax and child support payments. It is thought that letting people get away without paying these debts could have a detrimental effect on society.
Bankruptcy should always be a last resort if you are in debt. Most people don’t seem to realise the implications of filing for bankruptcy it stays on your credit file for six to seven years and this makes it almost impossible to get credit later on, it can also cause problems if you are looking for a job. Bankruptcy can affect the whole of your life and while it is in process you not allowed to have any form of credit nor are you allowed to have a bank account.
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