With the world still grappling with the news of tennis legend Boris Becker’s bankruptcy, it’s perhaps time for you to brush up on the basics of bankruptcy. The former coach of the current number 2 tennis player in the world, Novak Djokovic has lashed out on Twitter against the recent media reports of him being declared bankrupt though. Reportedly, Becker failed to pay millions of dollars in debt paving the way for bankruptcy proceedings against him. The man who earned $130 million in his career took to the social media site to express how “surprised” and “disappointed” he was with the news doing rounds and also asserted that he had the means to pay off the debt.
Bankruptcy among Celebs: Too Common?
Now, the world is no stranger to the instances of celebs going bankrupt and with Boris strongly contending the news of bankruptcy, even those who are shocked anew can actually choose to view financial vagaries from a fresh perspective… instead of just psyching out!
When exactly can you be declared bankrupt? When can bankruptcy proceedings be actually brought against you? When can you file for bankruptcy? We will explore answers in the course of the post.
It’s Time to “Acknowledge”
It is important to recognize and acknowledge the “financial alarm” at the onset. Are you only making minimum payments on your credit cards? Are you turning to your credit cards even for the necessities? Are you presently mulling debt consolidation? Have you already started getting calls from your bill collectors? Do you think that managing your finances is way out of your control now?
Red flags! Red flags! It is extremely important to resort to a thorough assessment of your personal finances from here onwards. Even if just two or three of the answers to the aforementioned questions are assertive you know that it’s time to take charge of your finances.
Hereon starts your journey of financial epiphany—which – of course – will determine whether you should file for bankruptcy or not. Start by creating an inventory of all your liquid assets that should ideally include bonds, retirement funds, student loans, vehicles, and non-bank account funds. Calculate the total value of your assets against your debt. If the value of the former is less then you know that it’s time to re-evaluate your finances. Is your sticky financial situation reason enough for you to file for bankruptcy?
You can either declare yourself bankrupt or else wait for the creditors to initiate proceedings (that’s what happened with Boris Becker). Both these ways of filing for bankruptcy have their own set of pros and cons to contend with.
Chapters 7 and 13 of Bankruptcy
Acquaint yourself with the diktats of Chapter 7 and 13 of bankruptcy. There might as well be various reasons for you to file for bankruptcy but let us tell you that medical expenses, unemployment, and over-extended credit are just a few of the common reasons behind the same. Chapter 7 of bankruptcy liquidates as much of your debts as possible. Chapter 7 of bankruptcy will stay on your credit report for 10 years.
Chapter 13 is alternately known as reorganization bankruptcy since it allows you to pay off your loans in three to five years. Once the court approves your bankruptcy, the creditor has no legal right to contact you anymore.