Financial trouble is common, and bankruptcy is a viable way to reduce hardships. The Gil Law Firm in Dothan, AL, understands that declaring bankruptcy is a big decision, and it’s not one that is right for every situation. This firm wants to aid those struggling to reach financial security. Below, their team describes how bankruptcy affects debt and credit so you can make the decision that is best for your financial future.
Understand the Effects
Though bankruptcy can aid those who cannot repay their debts, it can take a toll on credit ratings. It should only be used when necessary. If a financial status could improve in the near future, bankruptcy can be delayed. If there are no foreseeable prospects to improve financial stability, filing may relieve some of the burden.
Consider Affected Assets
There are two types of bankruptcy, and each option affects personal property differently. For a Chapter 13 file, debt will be reorganized, and a new payment plan will be created so outstanding sums can be paid back over a three to five year period. There is less protection for assets in a Chapter 7 case, however, as property may be repossessed by creditors to recoup losses.
Calculate Unsecured Debt
Unsecured debt includes credit card and medical bills. This type of debt can be discharged in some cases, which can relieve some of the financial burden. However, other types of debt such as student loans cannot be discharged. Debt that is largely comprised of loans is not relieved by declaring bankruptcy.
If you are facing financial stress, schedule a free legal consultation with The Gil Law Firm. Rafael Gil III or a member of his team will review your case and help you choose the best path to financial stability. For 17 years, this firm has helped Dothan residents restore their financial standings, so call (334) 673-0100 to set up an appointment. For more information on bankruptcy, visit the firm online.