Millions of people across the United States are currently trapped under mounds of debt. Sometimes, the only way to escape an obscene amount of debt is to file for bankruptcy. There are a lot of questions and misconceptions about bankruptcy that all tend to cause confusion. The following information should be used for those having debt problems.
For starters, Filing for Bankruptcy isn’t for everyone with large amounts of debt. Many people assume that their debt will be automatically erased once their bankruptcy claims are accepted. Bankruptcy claims will need to be accepted by a judge and that judge has a right to deny your claim.
Only a certain kind a debt can truly be eliminated after Filing for Bankruptcy. Unsecured debt tends to be the easiest type of debt to eliminate. Types of unsecured debt include credit card and department store charges, telephone bills, hospital bills, personal loans, and so forth. None of this debt required any kind of collateral to be given to a creditor beforehand. Since it is unsecured, a creditor cannot repossess a person’s property for unpaid debt.
If a person’s debt is secured, they won’t be able to eliminate it with the help of bankruptcy. In this case, a creditor has the right to a person’s property to cover the debt that they’re owed. Examples of secured debt include mortgages, student loans and auto mobile loans. If a person fails to pay their mortgage, a lender has the right to foreclose on their home. If a person fails to pay their auto mobile loan, the lender who financed the vehicle can legally have it repossessed.
It’s important to talk to a bankruptcy lawyer before filing a bankruptcy claim. A lawyer can look over all of the debt in question to determine if bankruptcy is the right move. Before choosing bankruptcy, a person may be able to make special payment arrangements with their creditors.
Choosing bankruptcy is a risky financial decision. Again, not every person who has a mound of debt is eligible to have that debt erased. Whether or not a person’s debt can be erased will depend on whether it’s secured or unsecured debt. Work closely with a bankruptcy attorney to make the best financial decision.