There are times when things can go out of hand, especially when it comes to your finances. When a person’s debt becomes unbearable and can no longer get repaid, the best way to manage these overwhelming financial responsibilities is through filing bankruptcy. But how does it work?
Bankruptcy is the legal process by which the court trustee and the judge examine both the assets and liabilities of people and companies who can’t pay their existing debt or bills. Once the measurement and evaluation of assets are complete, these properties will then get used to repay a part of the total remaining debt.
Understanding How Bankruptcy Works
Bankruptcy is an option that a person or a business can choose so that they can start anew with their finances. It provides them with an opportunity to have their debt forgiven while allowing creditors to get a form of repayment based on a person or business’s existing assets that can get liquidated. Federal courts handle all bankruptcy cases filed in the country.
Most people who file for bankruptcy weren’t born with a silver spoon. They don’t have any other options to pay for their debt than to file the case. However, for individuals, filing for bankruptcy comes with a con. It can affect your credit score as well as your ability to borrow money. Even more, it can also prevent you from filing for legal actions to halt wage garnishment.
When to File for Bankruptcy
Any debt relief attorney in Salt Lake City will say that you can file for bankruptcy at any time of the day. However, given your financial situation, it’s essential to weigh various factors, too. If it’ll take you more than four years to pay your existing debt, then it’s only a smart idea to file for bankruptcy as soon as possible.
Remember that filing for bankruptcy isn’t a way to put you in a bad light. Instead, it’s an opportunity for you to get a second chance at fixing your finances. If you have unexpected bills or loans that are weighing you down, bankruptcy might be a reasonable and practical choice.
Why Should You File for Bankruptcy?
One of the most common reasons people declare bankruptcy is to have a fresh start at their finances. However, others choose it to reduce somehow the stress that comes with your financial responsibilities.
Declaring Chapter 13 or any other type of bankruptcy case can abruptly stop all the acquisition measures that creditors do to collect the amount that you owe. It means that these financial institutions will no longer have any legal rights to file a lawsuit. That’s because of your debt or even liens in any of your property.
Once you’ve submitted the case, it’ll take at least six months to get it processed. During that period, any of the people close to you would have received various phone calls from collection bodies to get the debt paid. That’s why you need to have everything processed to completed to hasten the procedure.
These are the only things that you need to know about filing for bankruptcy. If you feel like your debt is beyond your control, then it’s best to reach out to a law group that can help you out with it.