Among the various financial and legal tools available to Americans, bankruptcy often has one of the most unfairly negative public perceptions. Bankruptcy attorney services exist to help people get their finances under control, but the process is sometimes wrongly seen as ruinous. Ask a bankruptcy attorney about the system, though, and they'll tell you that many people have been able to right their finances with a bit of help from the courts.
That isn't to say that bankruptcy is always easy or can't have pitfalls. However, it's important to understand why it's a possible option and how you may be able to use it.
Kinds of Relief
Petitioners need to understand the two basic types of relief available in the bankruptcy system. First, there is restructuring. It is a process where the court adjusts your debts downward so you can make good on a payment plan. Second, there is liquidation. This is a process where the court sells your non-exempt assets, pays the proceeds to your creditors, and cancels whatever debts are left after that.
Why Bankruptcy?
Bankruptcy buys people breathing room. Someone filing for liquidation under Chapter 7 may be at the point where they couldn't ever pay down their debts. That might be the case even if they threw every penny they made for the rest of their life at the problem.
In the American financial and legal system, bankruptcy is seen as something to avoid. However, people need to have financial lives. A bankruptcy lawyer can help you petition the court so you can try to get out from under crushing debts rather than living with them forever.
Is Your Credit Ruined?
Sometimes, the situation ends up being quite the opposite. It is true that the bankruptcy case will go on your credit record. Chapter 13 cases come off people's records after 7 years, and Chapter 7 cases come off after 10 years.
Notably, a company may offer you credit after you've gone through bankruptcy. Wiping out your debts through bankruptcy gives you a good start on rebuilding your credit. You won't, for example, be racking up negative points on your credit record for missing those payments because the old obligations are gone. As long as you manage your post-bankruptcy finances conscientiously, you can get to the point where you will have good credit.
What Happens to Your Assets?
If you file for restructuring and complete the plan, you get to keep all of your assets. Even in liquidation, many assets are exempt. You'll be able to keep a practical vehicle, clothing, furniture, and so on. To learn more, contact a bankruptcy lawyer.
Share30 June 2021
Filing for bankruptcy has a tendency to make people feel ashamed and stressed out, and can turn into a big source of depression if not handled properly. As a counselor for couples and families, I have worked with various families throughout the years who have had to go through bankruptcy. And during this time, I have seen firsthand how, with the right mindset, going through bankruptcy can make people stronger in their financial lives and careers. I started this blog to provide information about the right things to do and the things that should be avoided while going through bankruptcy to minimize stress and maximize potential once the process is over. If you have any questions or concerns, hopefully they can be addressed on these pages.