Declaration of Bankruptcy

Applying for bankruptcy is considered as a shameful act because the individual becomes a laughing stock amongst those who are near and dear to the family. The family gets a stigma and it would even ruin the name of the family. So people try to postpone the bankruptcy application to the maximum extent possible. Why people are hesitant? The reasons are many. Apart from what is stated above, the complicated legal procedure involved in bankruptcy cases is the first thing people fear. The other reason why people are hesitant to file bankruptcy application is the possible harassment by creditors. The creditor may file application for liquidating the personal assets of the debtor. The cost of litigation is one more reason why people hesitate to apply for bankruptcy. These are some of the main reasons why people are reluctant to file an application for bankruptcy. How justified are these fears? Of course the process of getting the bankruptcy is somewhat complicated. But there is an attorney who looks after all these procedures and guides the applicant. As a matter of fact, it is the duty of the attorney to take enough care and see that all the legal requirements are complied with. In so far as harassment by the creditors is concerned, once the application is filed, the creditors will have to approach the court for recovery of the amount due to them. They are not allowed to have any transaction with the applicant. So the applicant is safeguarded by the court. Cost of litigation: This is an area which may require careful consideration. Already in the dock with an unbearable burden of loan, the applicant may find it difficult to meet the expenses of litigation. Financial experts say that a bankruptcy application under Chapter 7 would cost around Dollars 250 to 300. On the other hand those filed under Chapter 13 would cost about 175 to 200 dollars. There are also instances of attorneys now and then demanding for some money from the clients. But in the overall analysis, the cost of litigation would be small when compared to the huge debt that is still hanging over the head of the applicant. But if the applicant is able to manage to pay the attorney, then he will be free from burden because the attorney would help to bail him out of the situation.