Bankruptcy should be considered the option of last resort. Filing for Bankruptcy could be a life changing experience one should make every effort to avoid.
What Is Bankruptcy?
Bankruptcy is a legal proceeding that enables the insolvent person deals with a financial crisis by relieving them of their financial obligations to pay their unsecured debts.
Bankruptcy is filed and administered by a licensed trustee in bankruptcy or Bankruptcy Lawyers. The insolvent person is required to pay the trustee fees for nine to thirty-six months.
The trustee fees and length of payments are dependent on the debtor’s surplus income, assets, the desire of the debtor to retain ownership of some of those assets and whether the bankrupt is a first time, second time or third time bankrupt. Once the last payment is made, the trustee will apply for the insolvent’s discharge from bankruptcy.
Bankruptcy is a serious step and not one I recommend lightly. However, it can be a legitimate option for those who need a fresh start.
Let’s explore the advantages and disadvantages of Filing Bankruptcy strategy.
Advantages of Bankruptcy
The bankrupt person is required to attend two mandatory counseling sessions that teach money management skills such as budgeting, how credit card interest works, and how to avoid the pitfalls that forced that person into bankruptcy in the first place.
Disadvantages of Bankruptcy
Often, when people consider bankruptcy, they don’t appreciate the potential for a psychological fall out that can last longer than the financial effects caused by the bankruptcy.
Bankruptcy will have a serious impact on your personal life and credit score for six years or longer. During that time, the debtor credit report will report that the debtors has filed for bankruptcy, and when.
How to help your client succeed with its Bankruptcy?
Leveraging bankruptcy as a strategy to deal with your client debt doesn’t solve the problems that create the delinquency in the first place. You can plan your client bankruptcy and help them through the recovery process. Using the Money Coaching Software Platform, you can personalize a plan to help your client cope with their Bankruptcy and smooth their transition gradually to putting financial house in order. You can help your client
Get to know their current financial reality
Determine their Net Worth and put strategies to improve their net worth gradually
- Define their life goals and priorities
- Find the cash they never know they have
- Implement a spending plan/budget, fund their life goals and costs of living
- Track actual expenses and measure against estimated expenses to bring further balance to their cash flow
- Commit the savings to funding their Save-Me-From-Debt and 911 funds
- Make sure they honor the terms and conditions of their bankruptcy so; they can successfully complete the bankruptcy
Bankruptcy is a life-shattering experience. You can help you client go through the bankruptcy process with ease using the Money Coaching Software Platform.
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