The decision to file bankruptcy is not one to be taken lightly. It’s usually a last-resort option that comes after attempting other debt relief options. Bankruptcy could ruin credit, make it difficult to access loans, and lead to the loss of valuable possessions. It can also impact the future financial goals of the person, like buying a car or home, getting an insurance or job. Financial advisors recommend exploring other options to reduce debt before considering bankruptcy.
Chapter 7 bankruptcy involves liquidating assets to pay creditors. The good thing is that a majority of people are able to keep certain essential items such as their home and high-value vehicles. Additionally, any court action taken due to unpaid debts will likely be stopped when a person is declared bankrupt.
Generally, individuals with regular incomes can opt to apply for Chapter 13 which allows them to design an arrangement that will pay off their debts over a period of three to five years. It is important to know that creditors will not be able to foreclose on your home, repossess your property, or garnish your wages during this time.
With a robust and customizable bankruptcy processing tool like Best Case by Stretto, loan service providers can automate notification of bankruptcy, monitor changes to account information and improve communication with attorneys. This powerful tool scans extensive nationwide bankruptcy databases to automatically detect and inform clients of changes, helping them minimize risk and avoid unnecessary operational expenses.
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