It is crucial to realize that bankruptcy should not be taken lightly. It is usually the last option available after having tried other ways to deal with debt. Bankruptcy can ruin credit, limit access to loans, and can result in the loss of valuable possessions. It can also impact future financial goals, such as purchasing a car or home, getting an insurance policy or obtaining a job. Financial advisors recommend exploring other options for debt relief prior to bankruptcy.

The most commonly used type of bankruptcy is Chapter 7 which involves liquidating assets to pay off creditors. The good thing is that many people are able to keep their most important possessions, such as their home or high-value vehicle. In addition, there’s a great chance that any court case that’s been filed in connection to unpaid debts is halted if the person is declared bankrupt.

In general, people with regular incomes can opt to apply for Chapter 13 to create a plan to pay off their debts in three to five years. It’s good to know that creditors will not take over the property you live in, or take possession of it. property, or garnish your earnings during this period.

Loan servicers who use a customizable and complete bankruptcy processing solution, such as Best Case by Stretto can automate bankruptcy notifications, track changes to account data and improve communication with attorneys. This powerful tool scans nationwide bankruptcy databases to detect changes on a regular basis and notify clients. It reduces the risk of bankruptcy and eliminate unnecessary operating expenses.