Nobody dreams about going bankrupt. Running into financial distress is an incredibly upsetting thing. You may fear for your future, worry about costing yourself more in overdraws and interest, and get anxious about constant calls from debt collectors and creditors. Bankruptcy can seem like the upsetting end-game to this whole dark period – a way of accepting defeat.
But that’s not the case. For some people, bankruptcy can be a way to escape many of the fears and anxieties of a bad financial situation. And when it is used, it’s not the end of the story. On the contrary, it’s a tool that people use to get back on their feet. With bankruptcy buying some time and financial breathing room for them, many people can recover from their financial problems and go on to lead successful lives. Far from being an unhappy ending, bankruptcy becomes a turning point! Here’s why.
How Bankruptcy can help
Bankruptcy law can be complicated, but the basics are pretty straightforward. When you file for bankruptcy, you are telling everyone that you’re out of money. You’re saying that you have debts you can’t pay, that you came by those debts honestly, and that you don’t have any more assets that you can sell off in order to pay those debts.
What kind of assets? Does this mean that you have to get rid of your house or car in order to declare bankruptcy?
Not necessarily! Your house and car are likely already the collateral in existing loans (your car loan and your mortgage). A lawyer will be able to apply the rules to your specific situation.
Once you’ve declared bankruptcy, you’ll be freed from many of your debts (whether those debts go away completely depends on the type of debt and the type of bankruptcy that you file). Whether you’re having trouble paying your credit card company or your neurosurgeon, there is a chance that bankruptcy can help you.
Bankruptcy is also helpful because it can freeze ongoing processes that are causing you stress. That includes foreclosure, which can be halted by bankruptcy proceedings. This can give you time to save your home or can extend the amount of time that you can stay in the house before it is sold. It’s not uncommon to see lawyers file bankruptcy papers on the day of a foreclosure sale, preventing the sale and forcing many parts of the process (depending on the state) to start over. Again, only an attorney can help you choose a strategy that suits your specific situation.
Is Bankruptcy Right for you?
Only a lawyer can tell you if bankruptcy is right for you (and nothing in this article should be construed as legal advice). So the best thing to do if you think that bankruptcy might be the best option in your situation is to call up a lawyer. Most good lawyers will give you a free consultation to start, and after discussing your situation with you, they’ll let you know if they can help you.
Choose a lawyer who specializes in bankruptcy, and ask them about the different forms of bankruptcy (Chapter 7 and Chapter 13). Your lawyer will lay out your options for you and will help you get back on the path to financial security.