How declaring bankruptcy affects your financial future

Overwhelming debt is a very common fact for many people today. Living in a consumer culture encourages spending beyond the ability to pay, credit cards with large limits are easy to come by and the fluctuating economy means job stability is not always a given. If you are stuck in a difficult debt situation and considering bankruptcy, you are not alone.

One of the main factors that may hold many people back from declaring bankruptcy is fear for their post-bankruptcy financial future. It is important to understand the facts in your particular situation so you can decide whether bankruptcy is the best option for you. Consulting with a qualified bankruptcy lawyer could be your first step in gaining more information. Here are some things you may want to research further as you consider your options.

Bankruptcy can be a fresh start

You may hear stories about how damaging a bankruptcy can be to your financial future, but the truth is that sometimes declaring bankruptcy can actually help speed up the process of rebuilding a good credit rating. Bankruptcy can give you a clean slate from which to start building a positive financial picture with new habits that help you prevent falling into crippling debt once again. Remaining in deep debt and insolvency can actually be worse than declaring bankruptcy in some cases, because the judgments may continue to pile up against you, and your credit score continues to plummet as a result. There are many success stories of people who have bounced back and even thrived financially after declaring bankruptcy.

You may retain some assets

People in serious debt who are considering declaring bankruptcy also worry about what assets they risk losing, especially a home, car or retirement funds. They may be comforted to know that many assets are protected under a system of exemptions. 

Minnesota has the advantage of offering some of the most generous bankruptcy exemptions in the country. Individuals pursuing bankruptcy in Minnesota may utilize either a state or federal system of exemptions to protect their belongings.

Even in situations where some of your assets may not be covered by a bankruptcy exemption, it may be possible to keep those items. You should speak to a bankruptcy attorney about what each scenario might look like in either a Chapter 7 or Chapter 13 bankruptcy.

If you are considering filing for bankruptcy, inform yourself about the differences in Chapter 7 and Chapter 13 to see which type may suit your situation best. A bankruptcy lawyer can help you understand your options and guide you through the filing process.

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New Brighton, MN 55112

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