If there is a large financial reset button in life, it goes by the name of bankruptcy. Just like when you hit the reset button on anything else, you may lose some things when your bankruptcy is discharged. However, before you get to that point, you have the opportunity to weigh your current situation against the chances of success in the future. Those who reach the decision to file bankruptcy do not do so lightly. They do it because they realize that they have a greater chance of succeeding after their debts have been discharged than they do right now. Sometimes, that success means giving up a few items and turning your gaze toward a whole other future.
Deciding Which Accounts to Pay Off
Many people think that when they file bankruptcy, they have to file on every account they have. That simply isn’t true. In fact, you can even pay off some accounts so that they aren’t included in the bankruptcy. Just be sure to check with your lawyer before you take this route. If you pay off accounts that are held by relatives, the courts may view you as showing favor to those people and accounts. If you pay off a debt within a certain time period before you file, the courts may view you as showing favoritism even if the creditor isn’t related. Our experienced bankruptcy lawyers can help you determine which accounts to address and the best way to move forward.
It is possible to leave some accounts off your bankruptcy and continue to make payments on them. This is not unheard of when it comes to things like your house or car. However, don’t expect the court to be happy if you file bankruptcy on all of your medical bills, but try to keep accounts open for your luxury pad somewhere in an exotic area.
It’s also important to keep in mind that you may have a better chance at filing a successful bankruptcy when your debt reaches larger numbers. An open account for a house or a car can make the difference between what the court thinks you can afford and what you can’t. In order to ensure success during and after your bankruptcy, you’ll need to be careful about how you deal with each account.
Managing Secured Accounts and Repossession
When repossession occurs, it is because you have filed on a secured account. Secured accounts are accounts that either were created to fund a specific item or are backed by funds in an account made for the purpose of securing a line of credit. In these types of accounts, the funds or the item are considered collateral in the event that you default on the account. In contrast, if you have a personal loan with your bank as a cash loan, it isn’t secured, no matter what you buy with it. At the same time, the courts can request that you attempt to sell some material items to cover part of your debts. This method is usually applied to things like second homes, boats, and other luxury or nonessential items. If you bought a couch with your credit card, they aren’t going to make you sell your couch. However, if you got a secured loan to buy the coach, the creditor does have the right to come and collect the couch. Click here to for more information on Chapter 7 bankruptcy.