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Common Misconceptions About Bankruptcy

Posted on January 29th, 2022

There are numerous myths and also false impressions linked to the general perception of bankruptcy, as well as what it means for an individual or company. Bankruptcy is ultimately a financial tool for businesses and individuals facing serious hardship. Although the variables that lead a person or business to file for bankruptcy may be unfortunate, the process is ultimately advantageous for the one who is in debt, as well as for the economy; this fact is frequently ignored as well as misrepresented in material that is written about bankruptcy.

Most debtors facing bankruptcy retain the representation of a bankruptcy lawyer upon initiation of the filing process. An experienced bankruptcy lawyer will be present to guide you through the intricacies of the filing process, guaranteeing accuracy every step of the way. Fillers of bankruptcy more often attain the preferred outcome when they seek expert legal assistance from a bankruptcy lawyer, and also will help to inform you concerning the benefits of filing bankruptcy.

  1. Each Case Varies from Person to Person

Viability of bankruptcy as a service for alleviating overwhelming debt varies for every individual or business. Elements such as net assets, income, total debt, family size and age, all affect a choice to declare bankruptcy for debt relief and forgiveness. These elements are all taken into consideration and have an influence on the choices made when filing for bankruptcy.

  1. Debtors often retain most of their property

Chapter 7 bankruptcy is frequently referred to as “liquidation bankruptcy”, which suggests that the assets of a debtor are to be liquidated, counting as repayment towards outstanding debt. However, many debtors maintain the majority of their property following the liquidation process. For example, the personal property of a bankruptcy candidate, such as furniture, electronics, and clothes, has little resale value. Such laws vary from state to state.

  1. Debtors with assets can keep their assets through Chapter 13

If a debtor happens to have assets that can qualify for liquidation under Chapter 7, they may choose Chapter 13 bankruptcy, in which case the debtor proposes a payment plan that would give creditors the value their assets would yield under Chapter 7.

  1. Bankruptcy induces a major debtor-creditor power shift

Bankruptcy shifts the edge from the creditor to the debtor and their representation. After claiming bankruptcy, legal action can not be used as leverage against a debtor. Laws dictate a shift in precedence which if debts are paid in full, a federal judge can enforce an automatic stay that halts actions of collection by creditors against a debtor. Creditors  being bound by bankruptcy laws rendering them unable to impose further notice of collection.

A bankruptcy lawyer from a firm like CT Bankruptcy Attorneys will help you meet specific bankruptcy requirements and help ensure you are providing accurate information with the central goal of achieving an outcome that is in your favor. Contact a lawyer that specializes in bankruptcy claims if you are considering filing for bankruptcy.


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