Finance

Bankruptcy is not as Bad as you Think – Here’s why

4 Mins read

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Throughout time, bankruptcy has garnered a terrible reputation. Most people seem to believe that filing for bankruptcy is an admission of defeat or even a sign of “financial death.” However, bankruptcy is not as negative as many believe. On the contrary, it may be the lifeline you need to clear your debts and rebuild your finances from the ground up.

This reputable Los Angeles bankruptcy lawyer has worked with hundreds of clients throughout his career and has heard all sorts of misconceptions about bankruptcy. Based on his experience, some of the most common bankruptcy myths include the following:

·       “Bankruptcy will make me lose all my assets,”

·       “I won’t be able to recover financially after bankruptcy,”

·       “If I file bankruptcy, I will lose my house,”

·       and “I won’t be able to rebuild my credit after bankruptcy.”

However, these myths are born out of ignorance about the process and unawareness of the benefits bankruptcy offers. If you want to learn the truth about bankruptcy and find out how it can help you get a fresh financial start, read on!

Enough Myths: What’s Bankruptcy?

Bankruptcy Enough myths

Myths aside, what is the actual definition of bankruptcy? Simply put, it is a legal process involving debtors (individuals or companies) who are unable to pay their debts. The purpose of the procedure is to clear the debtor’s debts, either through the sale of their assets or through a 3-to-5-year repayment plan, depending on the chosen bankruptcy chapter.

Therefore, if you are overwhelmed by debts, bankruptcy may be an alternative to discharge most of them to start anew.

If you want to learn more about the bankruptcy process and how a bankruptcy attorney can help you, please visit https://legalfacts.org/bankruptcy-lawyer/.

You won’t Lose all your Assets.

No, you will not have to sell all your assets to pay your debts if you file for bankruptcy. Before your filing, you will be able to exempt some of your most essential items from the process. For example, a modest car, your home (up to a certain amount), your clothes, and other important property will be exempt from the process.

However, if you decide to file for Chapter 7 bankruptcy, you will have to sell your non-exempt assets to pay your debts. Typical non-exempt assets include Luxury cars, a second vacation home, coin or stamp collections, valuable artwork, or jewelry.

You might not Lose anything at all.

You might not Lose anything at all in Bankruptcy

To be honest, you may not have to sell any of your assets during your bankruptcy filing. In most cases, chapter 7 filers don’t sell anything at all, simply because they have nothing to sell. In other words, none of their belongings qualify as non-exempt assets.

On the other hand, if you have non-exempt assets that you wish to keep, you may want to consider Chapter 13 bankruptcy. This type of bankruptcy will allow you to get rid of your debts through a 3-to-5-year repayment plan. If you fully comply with the plan, you will not lose any of your assets during the process.

It will Erase most of your Debts.

The primary blessing of bankruptcy is that it will free you from most of your debts. The process will wipe out your credit card debt, medical debt, personal loans, and much more.

However, that doesn’t mean that all your debts will magically disappear. Some debts cannot be erased by bankruptcy, such as student loans, alimony, child support, some taxes, and secured debts. 

Creditors will have to Stop Harassing you.

Another critical benefit of bankruptcy is the “automatic stay.” It is a provision that prevents your creditors from pursuing any debt collection actions during your bankruptcy filing.

In other words, after you file for bankruptcy, your creditors will be legally obligated to stop calling you, wage garnishments will be stopped, and you may even be able to stop foreclosure proceedings on your home.

Now, keep in mind that this stay is temporary. If, for any reason, your bankruptcy process is unsuccessful, creditors will be free to try to collect debts again.

You can Rebuild your Credit over Time.

You can Rebuild your Credit over Time after Bankruptcy

Bankruptcy offers many benefits, but you need to keep in mind that your credit will be significantly impacted by it. For example, a Chapter 7 bankruptcy filing will remain on your credit report for up to 10 years, while a Chapter 13 bankruptcy will stay on your credit report for seven years.

However, you can start rebuilding your credit right after you get your discharge. Tools like secured credit cards and credit builder loans will help you do just that.

Bankruptcy can be Simple with the Help of an Attorney

Now that you know that bankruptcy is far less negative than you thought, you may be considering filing for it to get rid of your debts. However, there’s still a problem: The process is often complicated.

That’s why the best way to navigate a bankruptcy filing successfully is to work with a local bankruptcy attorney, such as KT Bankruptcy Lawyer. If you have more questions about the process, contact a legal professional for a free consultation. You have nothing to lose.

How can you find an Experienced Attorney in your City?

Finding a reliable lawyer near you is much easier than you might think. The most efficient way to do this is through a simple Google search. Search for key terms, such as “bankruptcy lawyers near me” or “bankruptcy lawyers in my city.”

Savvy attorneys know that this is the most widely used method of seeking legal advice. That’s why they smartly invest in SEO to rank their law firm among the top results for the most relevant searches.

If you are an emerging lawyer, consider working with a Law Firm SEO agency that can help you stay competitive, just for a fraction of the price. Visit this attorney SEO agency’s website to find out how they could help you increase your online rankings: https://legalfacts.org/law-firm-marketing/attorney-seo-service/

About author
Breanna, with the help and support of BeDoper's audience, provides fresh news on the tech and EdTech daily to your screen. Stay connected with Breanna on FB, Twitter, and Pinterest to spice up your feeds and productivate your time.
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