The decision to file bankruptcy is not one to be taken lightly and it’s typically a last resort option after having tried other debt relief options. Bankruptcy could ruin credit, impede access to loans, and lead to the loss of valuable possessions. It can also impact future financial goals such as purchasing an automobile or home and obtaining work insurance. Financial advisors advise exploring alternatives to debt relief before considering bankruptcy.

The most popular type of bankruptcy is Chapter 7 which involves liquidating assets to pay creditors. The good thing is that many people are able to keep their main possessions, such as their home or valuable vehicle. Additionally, any court action taken due to unpaid debts is likely to be stopped in the event of a person becoming bankrupt.

In general, people with regular incomes can opt to choose to file Chapter 13 to create a plan to pay off their debts within three to five years. It’s good to know that creditors are not able to foreclose on the property you live in, or take possession of it. property or garnish your paycheck during this time.

With a comprehensive and configurable bankruptcy processing solution like Best Case by Stretto, loan servicers can automate notification of bankruptcy and keep track of changes to account information and enhance communication with attorneys. This powerful tool scans extensive bankruptcy databases across the nation to automatically find and notify customers of changes, helping them minimize risk and avoid unnecessary operational costs.