Will I lose everything by filing bankruptcy?
Mounting debt can mean mounting worries and fears for people across Georgia. One source of this anxiety stems from the fact that many people do not understand what their relief options are and how the different options can achieve different goals.
For example, people struggling with debt may inaccurately assume that if they file for bankruptcy, they will lose their cars, homes and other assets. The fact is that some people do lose assets when filing bankruptcy. However, state laws allow people, in most cases, to keep their home and car from being repossessed. For people who want to hold on to all their personal property — including a home and car — and repay debt instead of wiping it out, Chapter 13 could be the more appropriate route to pursue.
Chapter 13 bankruptcy is different from Chapter 7 in that is does not eradicate debt. It allows a person to repay debt by developing a payment plan that a person can afford. Some debts may be wiped out in Chapter 13, but for the most part, the debts will be repaid. This means that people will be able to retain their assets and personal property.
Filing Chapter 13 bankruptcy can provide people with an almost immediate sense of relief. Not only will there be a manageable plan in place to pay back debt, but filing will also put a stop to any foreclosure and repossession actions. Creditors will also have to stop calling to collect debt or threaten legal action.
In order to make Chapter 13 work and emerge in a stronger financial standing, people will need to make sure they do not incur more debt and make it their top priority to keep up with regular payments. If a person falls behind on these and other financial obligations, the courts may convert the Chapter 13 bankruptcy into liquidation, putting a person’s assets at risk.
The misconception that filing bankruptcy means losing everything may be why some people shy away from the option. But with legal support and a better understanding of how bankruptcy laws can work and protect people, Georgia residents can take control of their finances and work toward a better, more secure future.