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The decision to file bankruptcy isn’t one to be taken lightly. It’s usually a last-resort option that is used after trying other debt relief options. The bankruptcy process damages credit, limits access to loans, and can result in the loss of valuable items. It can also affect future financial goals such as purchasing a car or home, getting a job and getting insurance. Financial advisors recommend looking into other options for debt relief prior to bankruptcy.

Chapter 7 bankruptcy involves liquidating assets in order to pay creditors. The good thing is that the majority of people can keep certain items that are essential such as their home and high-value vehicles. There’s also a good possibility that any court action that’s been commenced in relation to unpaid debts will be halted once someone is declared bankrupt.

In general, individuals with regular incomes may choose to apply for Chapter 13 to create a plan to pay off debts in three to five years. The good thing is that it stops creditors from attempting to foreclose, take possession of or make garnishments on wages during this time.

Loan servicers who use a customizable and comprehensive bankruptcy processing software such as Best Case by Stretto can automate bankruptcy notifications, track changes in account data and enhance communication with attorneys. This powerful tool scans extensive bankruptcy databases across the nation to automatically identify and notify clients of any changes, helping them minimize risk and avoid unnecessary operational costs.