Not everyone is familiar with how the bankruptcy process works. Unfortunately, not all sources of information present a clear and helpful picture to Louisiana residents wondering about its protections. To assume that bankruptcy only wipes away obligations would not be accurate. There are other potential benefits to filing for Chapter 7 or Chapter 13.
The benefits of filing for bankruptcy
Excessive debts may become impossible to pay, and some obligations, such as necessary expenses, won’t go away. Chapter 7 and Chapter 13 provide options for those looking to start over. Chapter 7 involves bankruptcy liquidation, which means non-exempt assets are sold to cover debts and some remaining unsecured obligations are discharged. With Chapter 13, those with the means to make a payment plan would enter this form of bankruptcy. when debts are discharged under either chapter, the debtor no longer has an obligation to pay the creditor.
Discharging debt is not bankruptcy’s only benefit. Collection actions cease per the bankruptcy court’s directives. The stress people face from bill collectors may lessen.
Further benefits to bankruptcy protection
Not all property may become subject to liquidation, as there are exemptions. Home equity and a vehicle might fall under the exemption, potentially keeping someone free from a foreclosure or car repossession. Other property could be exempt, as well.
Interestingly, the law requires credit counseling and a personal financial management course. The value of such sessions may reveal itself in time. A person could learn how to avoid making any more troubling financial mistakes, the ones that might lead to another bankruptcy.
Starting over with a better financial slate might be something many bankruptcy filers greatly appreciate. Restarting one’s life without massive financial obligations could be a beneficial change.