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Bankruptcy: The End of the Road is the Beginning of the Road

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By: Sloan
on 10th Jul,2013

Oftentimes, the decision to stick it out and try to pay down existing debt can actually cause more harm than good.
Bankruptcy: The End of the Road is the Beginning of the Road

Life After Bankruptcy

The negative connotations surrounding the idea of filing bankruptcy can be misleading and not at all helpful for people battling mounds of debt. Oftentimes, the decision to stick it out and try to pay down existing debt can actually cause more harm than good. 

People in tough financial situations may want to consider all the effects of bankruptcy before ruling it out as a viable option. First and foremost, it’s important to work with a reputable law firm to ensure your best interests are protected throughout the bankruptcy process.

Bankruptcy Considerations

While filing bankruptcy may not be someone’s first choice, what many people don’t know is the role bankruptcy laws play within American society. People have been getting in debt since the start of civilization. Somewhere along the way, governments realized it was more economically feasible to help restore a person’s ability to contribute to society rather than invoking penalties and punishments. 

With today’s seemingly upside-down financial markets, unemployment rates and housing crisis, outstanding debt has become a commonplace predicament for both individuals and businesses. Not surprisingly, the ways banks and governments handle debt is an ever-changing endeavor. The printing of new money by the Federal Reserve, zero percent interest rates and debt settlement options all represent ways of easing debt, both existing and new. 

Current federal laws involving bankruptcy are intended to provide a means of debt relief for people unable to keep up with or afford existing debt obligations. Ultimately, these laws function more as a social service than a way to punish affected individuals and families. By getting rid of excess debts, citizens are in a better position to rebuild their lives. 

Positive Outcomes

Whether a person decides to relinquish all debt (Chapter 7) or partial debt (Chapter 13), there are positive outcomes to be had regardless of the type of bankruptcy. The fact that individuals can choose between the two options speaks to the system’s attempt to assist rather than harm the debtor. In cases where people decide to keep certain debts and retain select assets, such as a car or a home, they can still relinquish certain other debts to make their financial situations more affordable. 

It’s not uncommon for someone to be concerned about the monies saved in a retirement account when considering bankruptcy options. Just like with property or automobiles, a person can exempt his or her retirement accounts from a bankruptcy claim. 

Another often overlooked, positive outcome from bankruptcy is the fact that once outstanding debts have been wiped clean, a person’s credit standing is likely to improve. As long as past due bills sit on a person’s credit record, these accounts remain in a delinquent status. While credit bureaus do use a range of indicators when calculating a person’s credit rating, multiple delinquencies drag a person’s overall score down considerably. 

Indeed one of the most noticeable positive outcomes from filing bankruptcy is the immediate peace of mind from not having excess debt. Creditor calls stop. Pending lawsuits with threats of levying a person’s bank account stop. Threats of wage garnishment cease. In effect, this peace of mind alone makes it possible to move on and move forward with life. 

Foreseeable Losses

Nightmare stories involving bankruptcy filings are often wrought with clients not knowing what was included and not included in their court claims. Scores of clients may also have been hit with unexpected legal fees and costs for filing a claim. The attorneys at the Peters & Associates Law Firm make it a point to explain the details of a claim with their clients to ensure everyone’s on the same page. Likewise, filing costs and any associated fees are clearly communicated so clients know what they’re paying for and how much it will cost. 

When considering a bankruptcy option, some people mistakenly fear their assets will be liquidated and used to pay-off their creditors. Fortunately, bankruptcy laws do make provisions for exempt property, such as clothing and older model cars so debtors need not fear losing needed assets. 

Another common concern has to do with being unable to get a job with a bankruptcy on record. Unless a person works in a highly regulated financial field, it’s unlikely a bankruptcy will disqualify him or her as a job candidate. 

In terms of losing the ability to qualify for credit cards and loans after a bankruptcy, this is yet another misnomer. With a clean credit record, credit card companies will want to do business with you since you’re money is no longer tied up in debt. Granted, the interest rates will be higher but only for as long as it takes to reestablish a good credit rating. 

What to Look for in a Law Firm

For people who’ve relinquished all of their debt, our firm provides tips on steps they can take to re-establish their credit. This may involve advising them on how to get the right kind of secured credit card to ensure timely payments show up on their credit reports. 

For those who own properties in foreclosure, we can explore alternative options, such as short sales and loan modifications rather than just a bankruptcy option. Our attorneys can also advise on how a person can position him- or herself when it comes time to apply for a future loan. In cases where a client happens to have too many assets, we may advise this person to consider a debt settlement option rather than filing bankruptcy and having all these assets liquidated. 

Your law firm should not just file a successful bankruptcy claim, but help their clients take the necessary steps towards a strong financial future.



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