Declaring bankruptcy is a decision that can have a lasting impact on your financial future. While most people understand this to a degree, a large number of individuals do not know exactly how bankruptcy will change their finances. This debt relief option has changed dramatically over the years. In order for you to know whether or not filing for Chapter 7 or Chapter 13 bankruptcy is a good decision for your future, you need to first have a more in-depth understanding of the process and how it will impact your life.
If you are thinking about filing for bankruptcy, now is the time to look over some of the more common myths associated with the financial solution. Look over the details and see whether or not this is the right fit for you.
Losing Your Possessions
One of the biggest concerns people tend to have about bankruptcy is the idea that they will lose everything ever filing. Assets like a home or car can be valuable to an individual’s life and the thought of losing them can be incredibly scary. While the fear makes sense to a degree, people do not usually lose all of their possessions after filing for bankruptcy. In fact, you are likely to keep what you own. This is because Chapter 7 bankruptcy is a no-asset process that does not require those filing for it to list all of their assets.
Chapter 13 bankruptcy also allows you to keep your possessions, but the value of each item will be deducted from the repayment checks you receive after the process finishes. Look into the details of both Chapter 7 and Chapter 13 to get a better idea of which makes sense for your needs.
Debts Are Gone Forever
Another common myth associated with bankruptcy is the assumption that all debt is canceled forever once the process has been completed. While this would be a dream scenario for almost everyone, it is far from the reality of the situation. In most cases, recent taxes and family expenses like child support will not be canceled. Student loans are usually not forgiven either, though most consumers are trying to change this. Student loans create unnecessary debt and hold future generations back from success, so a vast majority of people are pushing for forgiveness acts to get these loans canceled.
The debts that you can expect to be canceled are credit card debt, personal loans and medical bills for the most part. While other debts might be forgiven, these are what banks deem finances that are “out of your control” to repay. To get a better idea of what exactly will be forgiven, reach out to experts. The professionals at an organization like Frego Law will be able to give you a more in-depth understanding of what you can expect when all is said and done.
There Are Better Options
While bankruptcy is a good solution for some people, it is not practical for most people. The better option is to pay off your debts. The process of filing for bankruptcy is long and complicated. By the time you see approval, you could have taken the time to pay back some of your debts. Financial experts suggest that consumers think long and hard about making payments on debts that they owe rather than simply relying on services like declaring bankruptcy. This service should be reserved for extreme cases where repayment is not a practical solution.
Understanding your options when you are dealing with a lot of debt can be a great way to find the solution that you need. Declaring bankruptcy is a popular choice for some consumers, but there are many details you have to understand before you can determine if this is the best fit for you. Weigh out the pros and cons of each solution and see which decision is best.