When someone has more debt than they can pay off, filing for bankruptcy may be the best answer. Unfortunately, many people may put off filing because they are afraid that they will lose all of their belongings or never be able to build back their credit. While there are some potential downsides to filing for bankruptcy, the reality is that there are also a lot of misconceptions about this debt relief option.
It is true that if one files for Chapter 7 bankruptcy, some of their possessions may be sold. This is to pay back creditors. However, there are a number of exemptions for Virginia residents. For example, automobiles under a certain value and certain types of retirement accounts may be excluded from being sold.
Filing for bankruptcy will also mean that a bankruptcy will show up on a person’s credit report for up to 10 years. In some cases, however, the damage to a person’s credit score will be greater if they don’t file. People can begin rebuilding their credit immediately after their filing is complete, and many individuals are eligible for home loans within two to three years of filing.
There are a variety of reasons why someone may consider bankruptcy. The most common reasons include long periods of unemployment, overwhelming medical debt and unexpected emergency expenses. It’s important that people determine the type of bankruptcy that is right for them based on their situation because it will affect how successful their filing is as well as if they are able to stay out of debt. A lawyer could help someone figure out if they are better off with a Chapter 7 or Chapter 13 bankruptcy.