Is being bankrupt equivalent to being penniless? Many privileged people are almost unaware of what bankruptcy is all about? They often misconceive bankruptcy to be a state in which a person is left with no money to spend at all.

Generally, bankruptcy refers to the confirmed pronouncement of a person's complete failure to pay his or her debts. In such a case a bankrupt person makes a pact to have his or her debts cancelled for giving up personal riches or signing some sort of a payment agreement.

Recession has troubled many lives and has resulted in redundancy of many individuals. Such individuals are expected to avail bankruptcy relief that is offered to anyone who is over-burdened by their bills and often face the embarrassment of not being able to pay them. Many people work overtime, only to compensate a great portion of their net income to pay their credit card debt. For such people bankruptcy can prove to be an ultimate refuge.

The fact is that people don't actually need to be poor or on the breadline before considering bankruptcy. In many cases, borrowers have stable jobs and they earn reasonable salaries. In fact, a good majority of people who file for bankruptcy are those who work and earn classic salaries. Even though different people have different concept in mind about being broke, but it is not necessary for the person to have empty pockets before being eligible for filing bankruptcy.

Knowing when it is time to file bankruptcy can be hard. Most people may think that they can pull themselves out of the problems which they are facing, but the truth is that, financially impoverished families and even businesses have to figure out when the time is right to declare bankruptcy and continue with a fresh start. How to know, when is the time to file for bankruptcy? It is usually different for everyone. Many people try to put it off as long as feasible, because they are scared of the dishonor of bankruptcy.

The alarm should ring when you start observing that you are gradually taking money from your line of credit, in order to pay mundane expenses and you start noticing the failure of your personal monthly budget. In such a situation you must seek for debt consolidation advice straight away.

The smart thing to do is to file for bankruptcy as early as you can when you start feeling turbulence in your accounts. It is sad that many people allow themselves to be dragged towards poverty line because of their lack of knowledge and misconceptions regarding bankruptcy. One doesn't need to be totally broke to be declared bankrupt. In fact bankruptcy will safeguard you and your possessions from being snatched by creditors and financial institution.

You must straighten your thinking about bankruptcy. Being bankrupt is not a curse or the end of a respectable life. It is only a misfortune that can be sorted out by taking the right measures during the right time.