It’s no secret, filing for bankruptcy can be a scary thing. Indeed, although there are benefits to doing so, there are also very real consequences associated with filing for bankruptcy that can affect you for many years to come. Moreover, since the average person has never had to file for bankruptcy, there is lots of misinformation floating around. Therefore, you may be reluctant to file for bankruptcy based on something that is entirely fabricated.
For instance, many people believe that filing for bankruptcy means that you will automatically lose your house. Nevertheless, that is not necessarily the case. With that in mind, let’s take a look at whether filing for bankruptcy means that you will lose your home.
What does it mean to file for bankruptcy?
For those who may not quite understand the concept, filing for bankruptcy means a person (or business) legally files to have their debts forgiven. This is typically done because their outstanding debts are too expensive for them to pay, and they need to eliminate the debt in order to start rebuilding their finances. The individual or business’s assets are then assessed and evaluated and may be used to repay some of the debts.
Most common types of bankruptcy
Although there are various types of bankruptcy, there are three that are the most common for individuals and organizations. They are:
- Chapter 7: This involves the liquidation of assets. It allows companies or individuals to get rid of unsecured debts (i.e., medical bills and credit card bills) and is geared towards those who may not have many things of value that can be used to repay outstanding debts. This is one of the quickest ways to stop various collection agencies from constantly contacting you, garnishing your wages/taxes, foreclosing on your home, repossessing your property, etc. Fling Chapter 7 essentially allows you some leverage to negotiate and have some input on which assets are used to repay your debts.
- Chapter 11: This type of bankruptcy involves the reorganization of businesses or individuals. This is most often used for businesses but may be used for organizations as well. The point of filing Chapter 11 is to reorganize the business’s finances to allow the company to become profitable once again.
- Chapter 13: The last most common type of bankruptcy is Chapter 13. This involves reducing debts and allowing the person who is in debt to repay their debts using payment plans that are more suitable for their budget. These repayments often occur in installments over a 3–5-year period.
Does filing for bankruptcy mean I will lose my house?
Although filing for bankruptcy can mean that you will lose your home, it doesn’t have to. In fact, many people who file for bankruptcy are able to keep both their home and their vehicles. However, this largely depends on whether or not your home meets the exemption threshold in your state. If you are not sure about this, you definitely want to find out before filing. Otherwise, you could be in for a rude awakening after you file.
Luckily, since it has long since been established that most people need their homes and vehicles to be able to earn a living and rebuild their finances, many real estate agents, lawyers, etc., make sure that your home meets the threshold long before you ever even consider filing for bankruptcy.
Helping clients navigate the bankruptcy process
If you are seeking reputable attorneys that are seasoned at helping clients navigate the bankruptcy process, we’re here to help. Here at Jerry E. Smith, Attorney Bankruptcy & Tax Resolution, we understand first-hand how difficult, time-consuming, and tedious the process of filing for bankruptcy can be. As such, we go above and beyond to provide each client with personalized assistance and solutions that can make the process as quick and painless as possible.
By working with Indianapolis bankruptcy lawyer Jerry E. Smith, you will benefit from his proven reputation for assisting his clients in navigating the bankruptcy process. Smith has extensive financial information and leverages both his financial and legal expertise to ensure each client gets a fair deal when filing for bankruptcy.
Proudly helping clients navigate the bankruptcy process, here at Jerry E. Smith Attorney Bankruptcy, we do our absolute best to allow all of our clients to put their debts behind them and move forward in a way that is less stressful and more conducive for living a stress-free life. There is no need to be afraid to file for bankruptcy. With the help of our team of experts, we will help guide you through it from beginning to end.
Interesting Related Article: “Should I File for Bankruptcy? How to Know When It’s Time for Bankruptcy“