Bankruptcy has long held a stigma among many residents of Florida and other areas. There are a variety of reasons why people fear filing, even when it’s necessary and could help them.
Why do people fear bankruptcy?
People often have a misconception about bankruptcy and believe that it can negatively impact their finances and their lives. There’s a fear that their credit will be permanently disrupted or even ruined and that they will lose everything they own. However, the reality is that while your credit might take a dip for some time, it can improve over time if you work on it.
You can keep most of your assets when filing for bankruptcy. If you are able to file for Chapter 7, you can keep your home, vehicle, clothing, household goods, jewelry and certain other property. Meanwhile, only your nonexempt assets are sold by a bankruptcy trustee to pay back creditors to satisfy your unsecured debt. This includes things such as credit card debt and personal loans.
What are the benefits of bankruptcy?
It’s important to know what filing for bankruptcy could do for you if you are struggling with unmanageable debt. If you are dealing with threatening calls from creditors or collection agencies, filing for bankruptcy can put a stop to them. Chapter 13 can also protect some of your property from repossession. You could also be protected against foreclosure on your home.
Creditors are also unable to file lawsuits against you to collect on debts when you file for bankruptcy. Wage garnishment is also stopped with a bankruptcy filing.
You also get the opportunity to start fresh with your finances after bankruptcy. If you are responsible with your finances, it gives you a chance to rebuild your credit. Paying all your debts in full and on time can prevent you from going into debt again in the future.