Filing for bankruptcy is a difficult decision to make, but for some, it may be the only way out of an insurmountable situation. What anyone facing overwhelming debt needs to remember is that it’s entirely common to be in this position, and there are plenty of ways to get back on track. However, it’s also natural to be worried about what will happen if you file for bankruptcy. So, if you’ve found yourself at a crossroads with debt consolidation and bankruptcy options, then this article is for you. Here, we will explore what bankruptcy means, and how it affects your assets.
What Happens When You File Bankruptcy?
If you’ve already tried the debt consolidation route, and you’ve now decided to file for bankruptcy, the most immediate consequence is that all your creditors must stop trying to collect payments from you. This is called the “automatic stay,” and it applies to all debts except those related to child support or alimony. The automatic stay also applies to any lawsuits or garnishments against you, so creditors can no longer act until your case is resolved in court.
The second step in filing bankruptcy is meeting with a debt expert or trustee who will help you manage your debt and protect your assets. The trustee works with the debtor to determine which assets are exempt from liquidation. Depending on the type of bankruptcy you file, these properties can range from necessities like clothes and furniture, to vehicles and real estate. After this property has been identified, the trustee will work with creditors on a debt repayment plan that takes into consideration any secured debts such as mortgages or car loans.
Will I Lose Everything if I File for Bankruptcy?
The truth is that not everyone who files for bankruptcy loses everything they own. In fact, there are many cases where debtors emerge from bankruptcy with more of their belongings than when they entered the process. Although some assets may have to be sold off to repay creditors (depending on the type of bankruptcy filed) this does not necessarily mean that everything will be lost forever. Depending on their individual situation and state laws, many people can keep at least some of their possessions after filing for bankruptcy if they meet certain criteria set by the court system.
Filing For Bankruptcy Has Many Outcomes
Filing for bankruptcy can be a long and stressful process, but the decision to do so should not be taken lightly. Bankruptcy is legally binding, so it will affect both your finances and possessions. Although bankruptcy can provide relief from immediate debts, it may require you to forfeit some of your property, such as cars or homes, in order to repay creditors. Ultimately, bankruptcy should be seen as a last resort when dealing with debt since it will have such significant financial and personal impacts. If you find yourself in this situation, it is in your best interest to gain assistance from a debt and bankruptcy expert, to help you through these troubled times.
The Result of Bankruptcy
As bankruptcy is a matter of public record, potential employers may have access to this information. Depending on the bankruptcy filing, including if it was voluntary or a court-mandated bankruptcy, it could adversely affect an individual’s job prospects, particularly in certain fields. In addition, having bankruptcy on one’s credit report and the score could further impede employment opportunities and chances of securing new loans or other financial instruments. It is important to consider the consequences bankruptcy can bring when faced with such a decision. Regardless of what you do, maintaining an open dialogue with prospects or potential employers is always the best way to approach any possible opportunities.
Final Thoughts
Filing for bankruptcy can be a scary process, but understanding what happens throughout it can help ease your concerns about losing everything you own. While filing for bankruptcy does mean liquidating certain assets to pay off creditors, this does not necessarily mean that all of your belongings will be taken away from you; depending on your state laws and individual situation, you might even come out of it with more possessions than when you entered. If you are considering filing for bankruptcy to manage your debt, research your options carefully before making any decisions regarding what steps should be taken next.