Bankruptcy is one of the most serious financial steps a person can take. It comes with many drawbacks but can be the only relief for a destitute individual being hounded by creditors.
Bankruptcy could be the right choice for several reasons, and here are just a few of the reasons considering this option might be right for you and your financial future.
Debts can be discharged or restructured
Bankruptcy can be the right decision because existing debts could be discharged or restructured.
This is important if debts have accumulated to the point where it has become impossible to pay them off because of accruing interest or late fees.
Discharged debts are simply forgiven. Other types of eligible debt can be reduced to a smaller amount or restructured into a reasonable payment plan.
A foreclosure can be avoided
Filing for Chapter 13 bankruptcy can be the right choice in order to avoid a foreclosure. The mortgage holder could be ordered by the court to adhere to a new repayment plan that takes the income of the person going through bankruptcy into account.
This allows a person to keep an existing home while also freeing up enough money to start saving and living normally every month.
Collection efforts will stop
Some debt collectors can start to make life miserable through questionable and sometimes illegal tactics that amount to harassment. These debt collectors can cause problems with family, friends and a job.
Courts will automatically issue a stay to creditors. This court order forbids the creditors from continuing collection efforts until the bankruptcy and debts have been resolved. This can make it easier to deal with the stress of bankruptcy.
Rebuilding credit becomes possible
Any person who is in a cycle of revolving debt or who owes more than what is being made will be unable to build good credit. Overwhelming amounts of debt will actually keep pushing credit scores lower and lower.
Bankruptcy can be the right choice when there seems to be no other way to preserve credit. Once debts are discharged or restructured, it is possible to slowly start rebuilding credit over the course of several years.
Potentially remove some liens
Anyone with a judgment lien on assets could find bankruptcy the right choice in order to preserve those assets. Bankruptcy could dismiss the lien if the asset is fully or partially exempt and the debtor has at least a small amount of equity in the asset. Bankruptcy could help a person to keep a home or car in these circumstances.
Filing for bankruptcy is not something that should ever be done lightly. It is still important to recognize when it is the best option available, and experts can be just the sort of people to help you know when it’s right for you.
These Edmonton bankruptcy professionals can help any individual make the right financial choices for their family’s future. Bankruptcy can help to reset finances so that it is possible to get a fresh start.
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Prince James says
I am not too sure about the positive impact of bankruptcy. Bankruptcy affects your credit negatively for up to 10 years. In today’s fast moving world committing yourself to tarnished credit for that long of a period of time is rarely advisable.
Lindsay Lee says
Bankruptcy may not always provide the complete solution. In most cases, bankruptcy does give a debtor a fresh start, but filing bankruptcy is not a panacea for all financial problems. Declaring bankruptcy can seriously damage a person’s credit rating, making it difficult to establish credit or take out loans in the future. You must evaluate your position having all the facts, and then make an educated decision. Here at Family Attorney Texas, we will help you arrive at that place. Many people can and do work themselves out of even very serious debt without ever going near a bankruptcy court, so declaring bankruptcy should not be an automatic first step for someone experiencing financial problems.
It would always be good to seek for financial advise prior of filing bankruptcy. It should be the very last option to take.
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