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In the event of bankruptcy, you won’t lose everything, and you’ll be able to reconstruct your financial future later on.
The hurdles you must pass through to qualify for this debt relief option might be confusing. Here are five bankruptcy facts to help you better grasp how the bankruptcy process works.
Fact 1: You won’t lose everything
You might believe that declaring bankruptcy entails forfeiting your home, vehicle, and any other assets you may possess. In actuality, you’ll probably keep the majority of your stuff.
No-asset cases, in which the debtor does not relinquish any property, make up the vast majority of Chapter 7 cases. This is due to two factors. To start, you can put aside some fundamental assets, also known as exemptions, that are required for day-to-day living.
Fact 2: Not all of your debts will be relieved
Most types of debt can be discharged under Chapters 7 and 13, however there are notable exceptions.
“There’s a perception that some sorts of actions should not be able to be avoided,” Moran adds. This includes current taxes, child or family support, and obligations incurred as a consequence of fraud.
You may generally erase debts from personal loans, credit cards, and medical costs, among other things. Your bankruptcy attorney will explain which debts will be impacted.
Fact 3: Paying off your debts isn’t always a better option
Even though declaring bankruptcy is among the most serious financial decisions you can make, it’s not necessarily a terrible one. In fact, declaring bankruptcy could be your wisest course of action.
Bankruptcy may be an option if your obligations exceed 50% of your income and you don’t see a method to pay them off within five years.
Fact 4: Filing for bankruptcy is not a personal failing
Given that medical costs accounted for around 57 percent of bankruptcies in 2009, and that the cost of medical deductibles has increased growing faster than salaries over the last decade, many bankruptcies are likely the result of stagnating earnings rather than bad financial management.
Whatever your motivation for seeking this type of debt relief, consider bankruptcy as a tool that can assist you in gaining control of your money.
“There are many folks who would be considerably better off if they declared bankruptcy.” But they are so resistant to it that they wait until they completely collapse or have another serious catastrophe that drags them in,” Moran adds.
Fact 5: Bankruptcy will not ruin your financial future
There’s no getting around it: For the seven to ten years that a bankruptcy remains on your credit report, you may anticipate limited credit and higher interest rates. However, your credit score is likely to improve immediately after you file for bankruptcy.
Furthermore, there are other options to rebuild your credit following bankruptcy, such as applying for a home loan.
Next steps
You’re ready to explore your choices with a bankruptcy attorney and put yourself in a position to file successfully now that you know what will — and won’t — happen throughout the bankruptcy process.
To contact a reputable business, contact Recovery Law Group because before you proceed with filing for bankruptcy, it is vital to speak with an experienced attorney. Click on the link to know more https://recoverylawgroup.com/bankruptcy/