Misplaced worries about bankruptcy

Misplaced worries about bankruptcy

On Behalf of | Apr 13, 2022 | Uncategorized

Few people want to find themselves in a position where filing for bankruptcy is unavoidable. However, venturing into a Michigan federal bankruptcy court could be appropriate to deal with insurmountable debt. The bankruptcy laws provide ways for debtors to settle with creditors and avoid collection actions. However, many people feel somewhat frightened or worried about the process and any related stigmas.

Worries about bankruptcy and debt

Debtors may have concerns about what may happen to them if they file for bankruptcy. Sometimes, the fears derive from not understanding what bankruptcy entails or from false information. For example, Chapter 7 offers liquidation bankruptcy, a process that liquidates certain assets to pay some debts. Someone might believe liquidation involves the forcible sale of a vehicle they need for work. Such may not be the case, as the process does not intend to punish people struggling with their finances.

Others may worry about the stigma bankruptcy brings. They might not realize many benefits outweigh perceived issues of negative perceptions. Collection actions could stop, and unpayable credit card balances could face discharge.

Some believe they could earn more and pay off their debts, even when indications suggest increased revenues aren’t happening. An optimistic outlook might serve as a way to fool oneself into thinking bankruptcy isn’t necessary.

Reviewing options for bankruptcy

Anyone filing for bankruptcy could explore the filing categories available to them. Those who do not pass the means test for liquidation bankruptcy might accept a repayment plan under Chapter 13. Be mindful that some debt may face discharge under Chapter 13. Once discharged, the debtor has no obligation to repay the debt.

While bankruptcy affects credit scores, so do missing payments, defaulting on loans, and maxing out credit cards. Seeking assistance in bankruptcy court could set a financial recovery course that’s nothing to fear.