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Why people choose bankruptcy to manage debt

Many people in Georgia are scared of bankruptcy. In fact, it could be a good financial decision in some cases. That is because there are some things bankruptcy could do that simple debt restructuring would probably not accomplish.

It is also important to note that, as explained on FindLaw, the process is not open to everyone. One must typically satisfy certain requirements regarding income and expenses. The court would also consider any other recent bankruptcy when determining eligibility.

If a person does qualify to file, the process would often relieve debt more quickly than would paying minimums on loans. This is due to the fact that the lenders would forgive part of the financial liability. 

Bankruptcy may have a negative effect on credit in many cases. However, late payments and other problems characteristic of high-debt situations also tend to damage credit. Often, people begin to start saving money and rebuilding credit more quickly when they choose to pursue bankruptcy than when they try an unassisted approach.

There are benefits and drawbacks to each strategy. Unfortunately, there are common myths about bankruptcy that cause many to overlook a simple fact: The process's sole purpose is to get people out of debt. As stated on Debt.org, it is an opportunity for many to reclaim financial success, and to preserve essential assets they still own.

There are various things bankruptcy might do:

  • Stop a Sherriff's sale
  • Save a home
  • Forgive debt
  • Allow a reduced repayment plan
  • Halt creditor harassment

However, as mentioned in the Debt.org article, it is important to analyze the situation before proceeding.

 

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