The decision to file for bankruptcy is not one to be taken lightly and it’s typically a last resort option after having tried other debt relief solutions. Bankruptcy can sabotage credit, impede access to loans, and result in the loss of valuable items. It can also impact future financial goals like buying automobiles or a house or job and getting insurance. Financial advisors recommend exploring other debt relief options before bankruptcy.
The most commonly used type of bankruptcy is Chapter 7 which involves liquidating assets to pay off creditors. The good thing is that most people can keep essential possessions such as their home and expensive vehicles. Additionally any court action regarding unpaid bills will likely be stopped if a person becomes bankrupt.
In general, individuals with regular incomes are able to choose to file Chapter 13 to create a plan to pay off their debts within three to five years. The good thing is that it impedes creditors from attempting to foreclose or garnish wages during this time.
Loan service providers who utilize a flexible and complete bankruptcy processing solution such as Best Case by Stretto can automate bankruptcy notifications, track changes to account information, and improve communication with attorneys. This powerful tool searches extensive nationwide bankruptcy databases to automatically identify and notify clients of any changes. This helps them reduce risk and avoid unnecessary operational expenses.