It is essential to recognize that bankruptcy should not be taken lightly. It is typically the last option after having tried other options to reduce debt. Bankruptcy can ruin credit, restrict access to loans, and could result in the loss of valuable possessions. It can also affect future financial goals, for example, buying a vehicle or home, obtaining a job and getting insurance. Financial advisors suggest exploring alternatives to debt relief before considering bankruptcy.

Chapter 7 bankruptcy involves liquidating assets to pay creditors. The good news is that the majority of people can keep certain essential items like their homes and high-value vehicles. Additionally, there’s a good possibility that any court action which has been filed in relation to debts that are not paid will be halted once someone is declared bankrupt.

In general, people with a regular incomes can opt to file for Chapter 13 which allows them to design a plan to pay off their debts over a period of three to five years. The good thing is that it impedes creditors from attempting to foreclose, repossess or the wages of employees during this period.

With a flexible and comprehensive bankruptcy processing software such as Best Case by Stretto, loan servicers can automate the notification process for bankruptcy and keep track of changes to account information and improve communication with attorneys. This powerful tool searches across the nation’s bankruptcy databases in order to detect changes on a regular basis and inform clients of any changes. It helps to reduce risk and avoid unnecessary operating costs.

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