Bankruptcy Basics: Some Facts That You Need To Know
Filing bankruptcy can help you when you’ve no other way to repay your outstanding debts. However, you should be aware of the consequences before taking the decision to file a bankruptcy. Here are some facts that you should know before filing a bankruptcy.
Can bankruptcy help to stop wage garnishment?
Filing bankruptcy can help you to stop wage garnishment. If your wages have already been garnished, then bankruptcy can help you to get back some amount of your garnished wage.
Should you contact an attorney?
Every bankruptcy is unique; therefore, it is advisable that you seek legal advice before filing bankruptcy. An attorney can guide you regarding the Chapter that will suit your financial condition. He/she can also help you decide whether or not to file bankruptcy.
What will happen to your secured debts if you file bankruptcy?
In case of secured debt (such as, a mortgage), the creditor has every right in the collateral along with the legal right to sue the debtor. When you’re filing Chapter 7 bankruptcy, your personal liabilities may be discharged while the lien on the property remains as it is. When it’s not possible to avoid the lien, the debtor has no other choice than to pay back the amount.
Will you lose your major assets?
If you file Chapter 7, then the bankruptcy court may require you to liquidate some of your assets in order to repay your outstanding debt. You can keep your non-exempt asset (the property, which a trustee can sell in order to pay unsecured debts) if its value is lower than the exemption limit allowed by the State/Federal Government.
Can you obtain credit after filing bankruptcy?
Usually, a bankruptcy stays in your credit report for 7-10 years. It’ll be difficult for you to obtain credit and even if you get it, you’ll have to pay high interest. However, it’ll be relatively easier for you to obtain credit after 2-3 years of filing bankruptcy.
One of the major advantages of filing bankruptcy is that it helps you to make a fresh start. It also helps you to avoid creditor/collection calls. However, it is advisable that you take help of an attorney before filing bankruptcy.
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