In the simplest form, personal bankruptcy is a court-ordered and court protected plan to help those in financial crisis satisfy their creditors as much as possible. Bankruptcy is a way to protect individuals from repossession, foreclosure, and other legal actions that creditors may take. If approved by the court, you can work out a plan outlining how much you will pay back to your creditors to obtain a fresh financial start.
Bankruptcy is a decision not to be made lightly, it affects your financial future for years to come. It is almost always better to have a bankruptcy on your credit report versus losing your home, your car, or other necessary assets that you and your family have.
If you are worried about your credit rating when you file bankruptcy, you should know that late, and missed payments can also stay on your credit report for up to seven years. Other negative impacts to your credit report can be repossessions, foreclosures court judgments, and liens. By the time most people are thinking about bankruptcy, their credit score has already taken several hits and can make you a high-risk for any potential lenders.
The automatic stay is a legal action that takes effect as soon as you file your paperwork. The stay stops all creditor’s phone calls and efforts to collect on a debt. This protection gives you time to decide how you want to move forward with your finances. You can determine if you’re going to keep your home or your vehicle and either catch up on the payments or have your debt wiped away.
If you are considering bankruptcy contact a Plano bankruptcy attorney.