The decision to file bankruptcy is not one that should be taken lightly. It’s usually a last-resort option that is used after trying other debt relief solutions. Bankruptcy can sabotage credit, make it difficult to access loans, and could result in the loss or valuable items. It can also hinder the future financial goals of the person, like buying a car or home, getting an insurance or job. Financial advisors recommend exploring other debt relief options prior bankruptcy.

The most popular type of bankruptcy is Chapter 7 which involves liquidating assets to pay off creditors. The good news is that a majority of people are able to keep their essential items like their home or valuable vehicle. There’s also a good chance that any court proceeding that’s been filed in connection to debts that are not paid will be halted once someone is declared bankrupt.

In general, people with a regular income can choose to apply for Chapter 13 which allows them to design an agreement to pay off their debts over the course of three to five years. It is important to know that creditors cannot take over your home, repossess your property or garnish your wages during this period.

The loan servicers who utilize a customizable and comprehensive bankruptcy processing software such as Best Case by Stretto can automate bankruptcy notifications, track changes in account data, and improve communication with attorneys. This powerful tool searches the entire nation’s bankruptcy databases in order to detect changes automatically and inform clients of any changes. It helps reduce the risk of bankruptcy and eliminate unnecessary operating expenses.