So many people have a bad idea about bankruptcy because it has become such a negative word. However, for those in serious financial distress, it’s often the only saving grace to be found. Even when you consider things like credit counseling and debt settlement plans, you’re committing to years of repayment and the potential years it will also take to restore your credit afterward. Bankruptcy, on the other hand, writes off all the debt and you’ll generally be able to start restoring your credit a lot sooner. Here are some more things you didn’t know about bankruptcy.
Bankruptcy Comes in Several Forms
There are different types of bankruptcy filings out there. Most consumers file Chapter 7 bankruptcy, but some will file Chapter 13. Businesses also have their own classifications and there are a few other specialty filings, as well. You can do your research to learn about each and what it offers, but it usually depends on your income, the type and amount of debt you have, any assets and concerns with them, and other details.
Bankruptcy Can Get Your Car Back
Some people are shocked when they see this one—after all, isn’t bankruptcy supposed to take your assets? Well, if you file for Chapter 13, you will have the option to set up a repayment plan with the repossession agent and/or lender so that you can pay the vehicle off and return to driving it. This is not possible with other types of bankruptcy and usually won’t be an option as part of credit repair.
One in 70 Households Files for Bankruptcy
Too often, people think that bankruptcy means totally broke, washed out, and no hope—what they don’t realize is that plenty of people who are earning an income are filing for bankruptcy. One in 70 households in the U.S. files each year, in fact, and no one forces it. It’s actually the best solution for many people based on their financial situation.
Bankruptcy Is a Right
As part of the U.S. Constitution, filing bankruptcy is a right to which all Americans are entitled, as of 2005. This was added as part of an update known as the Bankruptcy Abuse Prevention and Consumer Protection Act and is designed to ensure that everyone has the right to the best financial solutions for them, including the option of filing for bankruptcy if it is deemed the right choice.
You Don’t Lose Everything
Again, each case is going to be circumstantial and you’ll have to discuss with your lawyer to see what you are facing. However, in general, filing bankruptcy isn’t automatically going to mean that you lose all of your assets. Plenty of people file and have their cases discharged, and still own homes and vehicles. The court isn’t going to take your only mode of transportation when you need it to get to work, after all.
Sometimes Bankruptcy IS the Best Option
Bankruptcy gets a bad name but it can actually be a positive solution for several people who have few other options. All sorts of things can happen in life that impact your finances and it’s always going to be difficult to choose the best course of action to rectify the situation. However, you shouldn’t discount this option because it has a bad name or because of whatever preconceived notions you have. Talk to a lawyer. They’ll point you in the right direction.
The U.S. is no stranger to bankruptcies. Now that people are facing insurmountable student loan debts and medical bills, it’s getting even more common to choose this solution than trying to repay debts or settle otherwise. Before you jump to conclusions, talk to a professional to find out what’s best for you.
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