Many individuals who are considering bankruptcy may be putting off filing because they are afraid that doing so means they will lose all of their possessions. Luckily, filing for bankruptcy likely will not leave Tennessee residents with nothing. Even though Chapter 7 bankruptcy includes liquidating assets, there are certain assets that may be considered exempt and remain the property of the owner. Under Chapter 13 bankruptcy, all assets are kept and a repayment plan is used.
It is important to understand, however, that bankruptcy does not necessarily mean that an individual will get to keep all assets and have all debts discharged. There are certain debts that cannot be discharged via bankruptcy. Student loan debt is one of the most common types of debt that is typically not forgiven through bankruptcy. There are also other debts that cannot be discharged, such as child support and taxes.
Another worry that individuals may have is that their credit will be ruined if they file for bankruptcy. However, this is not necessarily the case. Though bankruptcy will affect credit scores for a time and individuals will likely pay higher interest rates after completing their bankruptcies, parties often have the ability to work toward effectively rebuilding their credit. Additionally, many credit scores that are considered below poor may even improve slightly after completing bankruptcy.
There are many misconceptions surrounding bankruptcy that may cause individuals to hesitate before considering it as a viable option. However, with the correct information, Tennessee residents may come to find that this option could be vastly beneficial for them. Interested parties may wish to determine whether moving forward with this debt relief avenue could be right for them.
Source: nerdwallet.com, "5 Bankruptcy Myths Dispelled", Sean Pyles, June 7, 2016