Overwhelming debt affects many Americans. When people have too much debt, it’s more challenging for them to purchase things and this can have an effect on the overall economy if they don’t do anything about it. Fortunately, the bankruptcy code allows people to eliminate some or all of their debts through chapter 7 bankruptcy. This type of bankruptcy protection is the most commonly used because it can result in debts being discharged without any payment. People who own real estate or other valuable assets might have to give up some of the things they own to pay a portion of their debts. However, many of the people who qualify for Chapter 7 don’t own property and their assets fall within the limits of what they are permitted to keep.
Filing bankruptcy, although there are some downsides, has obvious benefits. After getting outstanding debts discharged, an individual or married couple can get a fresh start. Of course, major creditors might be hesitant to give them an unsecured credit card and they won’t qualify for a traditional mortgage for a few years, they will have more options than they didn’t when the minimum payments on their debts exceeded their monthly income. People who file for chapter 7 bankruptcy have more disposable cash they can use to start rebuilding their lives. If they want to, they could get an unsecured credit card, high-risk car loan and rent-to-own home right away to start rebuilding their credit. Because the bankruptcy will remain on their credit report for 10 years, it will likely take some time to achieve a fair or good credit score but it is possible for those who are serious about restoring their good credit.
Bankruptcy is handled through the federal courts and should not be done without guidance from a bankruptcy attorney. It’s essential to fill out all the paperwork completely and accurately to avoid having the case dismissed. An individual or couple who files for bankruptcy gets immediate protection from creditors. However, if the case is dismissed because they intentionally or unintentionally provided inaccurate or incomplete information, they lose those protections and creditors can resume collections actions, including filing lawsuits or garnishing wages. An experienced attorney could answer questions related to the documents that need to be filed as well as the process they can expect to go through from beginning to end. As long as all the documents are complete when they are filed, people who need bankruptcy protections may be able to have their debts discharged within a few months.