Bankruptcy is a massive step towards financial relief. However, it’s essential to consider all options to ensure that bankruptcy is the right decision for you when choosing bankruptcy. There are several types of bankruptcy chapters to choose from, offering various advantages and exemptions. One of the most significant concerns debtors have when filing for bankruptcy is the impact such a decision might have on their credit scores. Know that it’s possible to rebuild credit over time after your bankruptcy case is resolved, allowing debtors to experience a proper fresh start. As The Law Offices of Neil Crane will share, there are several benefits to accessing the experience that a lawyer can provide. They can assist with choosing the right chapter of bankruptcy to file for and ensure that the debtor’s rights are protected based on their specific needs.
The Advantages of Filing for Bankruptcy
There are several reasons a person may consider bankruptcy as a solution for their debts. Whether you spent beyond your means, fell behind due to job loss, or experienced an accident or illness that resulted in exorbitant medical expenses, a person may be unable to make ends meet. Once all possible options for debt relief are explored with a bankruptcy Lawyer, bankruptcy may be the most viable option. Some advantages that debtors experience when they choose bankruptcy include:
- When a person files for bankruptcy, they are granted an automatic stay which stops creditors from collecting debts. As a result, they must stop moving forward with repossessing property and contacting the debtor to collect payment.
- Can prevent wages from being garnished
- Stopping the bank from foreclosing on your home
- Bankruptcy allows people to start anew
- The ability to access debt counseling so that debtors can learn from their previous financial mistakes
- Certain exemptions are offered, allowing you to retain some of your property
Sometimes, there is no way out of the financial challenges a debtor is experiencing, so it’s important to consider bankruptcy as an option. While choosing bankruptcy is not an easy decision, it allows the opportunity for debtors to reduce their debts and make a fresh start.
Asset Protection for Bankruptcy
It’s a common misconception that they automatically lose all of their assets when a person files for bankruptcy. Know that it’s possible to retain some of your assets through the exemptions that are offered within the state. The exemptions offered will depend upon the type of bankruptcy chapter you choose. Common exemptions include:
- Homestead Exemptions: Allows for $75,000 in equity for individuals and $150,000 for couples
- Personal Property Exemptions: For food, clothing, and household goods
- Wage Exemptions: 40 times the minimum wage
- Vehicle Exemptions: Up to $3,500
It’s important to note that protecting assets during bankruptcy proceedings is contingent upon the state you live in. Meeting with a lawyer and discussing with them the specifics of your situation will be imperative for those who would like to retain some of their property.
Credit Scores After Bankruptcy
It should be no surprise that a debtor’s credit score will take a substantial hit after they file for bankruptcy. This is often a deterrent for many. While some may seem a significant drop, it’s likely that your debts have already profoundly impacted your credit score. Despite the drastic dip in your credit score, keep in mind that your credit score will begin to rebound once you file for bankruptcy. Know that rebuilding your credit score begins the moment you file for bankruptcy. Making savvy financial decisions and not incurring any additional debts makes it possible to come out after bankruptcy on top.