The decision to file bankruptcy is not one to be taken lightly. It’s typically a last resort option that comes after attempting other debt relief options. Bankruptcy can sabotage credit, impede access to loans, and lead to the loss of valuable items. It also affects financial goals such as purchasing automobiles or a house and obtaining work insurance. Financial advisors advise exploring other debt relief options prior bankruptcy.

Chapter 7 bankruptcy involves liquidating assets to pay creditors. The good thing is that many people are able to keep their essential items like their home or expensive vehicle. In addition any court action due to unpaid debts is likely to be stopped in the event that a person goes bankrupt.

In general, those with regular incomes may choose to apply for Chapter 13 to create a plan to pay off their debts over three to five years. The best part is that it stops creditors from trying to foreclose, repossess or make garnishments on wages during this time.

Loan servicers that use a customizable and comprehensive bankruptcy processing solution, such as Best Case by Stretto can automate bankruptcy notifications, track changes to account data and improve communication with attorneys. This powerful tool scans nationwide bankruptcy databases to discover changes automatically and notify clients of any changes. It helps minimize risk and avoid unnecessary operating costs.