It is crucial to realize that bankruptcy should not be taken lightly. It is usually the last resort option after trying other debt relief options. The bankruptcy process can damage credit, restrict access to loans and may result in the loss of valuable possessions. It can also hinder the future financial goals of the person, such as purchasing a car https://brittandcatrett.com/2020/03/28/small-business-is-the-best-start/ or home, getting an insurance or job. Financial advisors recommend exploring alternative debt relief options before considering bankruptcy.
The most common type of bankruptcy is Chapter 7 which involves liquidating assets to pay off creditors. The good news is most people can keep their main possessions, such as their home or high-value vehicle. Additionally any court action for unpaid bills is likely to be stopped if a person becomes bankrupt.
In general, those with regular incomes can choose to make a Chapter 13 to create a plan to pay off their debts in three to five years. The good news is that it prevents creditors from attempting to foreclose, take possession of or take wages as garnishments during this time.
With a complete and flexible bankruptcy processing solution such as Best Case by Stretto, loan servicers can automate the notification process for bankruptcy and check for changes to account data and enhance communication with attorneys. This powerful tool searches comprehensive national bankruptcy databases to detect and inform clients of any changes, allowing them to reduce risk and avoid unnecessary operational expenses.