Imagine that you have a mountain of debt that is causing you mental anguish and emotional pain. The stress of the situation cripples you at work, making it impossible for you to concentrate. Every time the phone rings you ignore it, because it's yet another unknown number from a likely debt collector. You don't even read your mail anymore because you're afraid of what notices you'll receive.
Filing for bankruptcy is intimidating, and one of the biggest fears that most people have going into the process is that the filing will ruin their life for a long time. There are obviously some serious matters that could be detrimental to you in the wake of a bankruptcy filing, but these are relatively short term issues. The long view is what you need to be focused on during bankruptcy. For your financial and personal well-being, a bankruptcy filing can be very helpful years down the line.
There are so many forms of debt out there that it can be hard to keep track of them all. Credit card debt, mortgages, car loans, student loans, medical debt -- the list goes on and on. But today let's talk about that last one we mentioned. Medical debt is a huge problem for millions of Americans, and it doesn't appear to be getting any better.
When you file for bankruptcy, one of the most important parts of the process is the debt discharge process. This stage of the bankruptcy will see many of your debts eliminated, and your creditors will no longer be able to go after that debt. Chapter 7 heavily relies on the debt discharge process, while Chapter 13 is more focused on the debt reorganization process and implementing a new payment plan.
Given the complexities of bankruptcy and the fear that many people feel about the process, there are two common questions that people have when they discuss the issue with an attorney. The first is "what are the legal and logistical processes for a bankruptcy filing?" The second is "what impact will the bankruptcy have on my life, both immediately and well into the future?"
Bankruptcy comes with a lot of unknowns, and for people who are going through the process for the first time, they will understandably wonder if their assets are at stake during the bankruptcy. In some cases, your assets may be at risk. Usually smaller assets will be liquidated during bankruptcy. However, under Louisiana law, you are able to make certain assets exempt during the bankruptcy process. Your home and car are two of the big examples in this regard.
Carrying debt will do funny things to your mind. People who would normally make calm, rational decisions starting making rash choices in an effort to eliminate the debt from their lives. Many people are like this, and they don't deserve ridicule for it because debt truly is a powerful, stressful force on a person's life. It is why you see so many television ads and hear so many radio ads by payday loan companies and debt consolidation businesses. These companies prey on the anxiety of people who are in debt.
Bankruptcy is an inherently complicated and heavy process for the person filing. It is scary and intimidating too, because the perception of bankruptcy is that once you file it, your credit will be ruined forever and your life will never be the same ever again. It is this stigma that we are trying to fight. Bankruptcy doesn't have to be this "world destroyer" that it is made out to be. To the contrary, bankruptcy can actually help you rebuild your credit score.
There are many different forms of debt. You can be indebted to credit card companies. You could owe money due to a medical emergency. You could have student loans, or car loans, or a mortgage. Debt comes in many, many different forms, and knowing how to tackle them is imperative to filing for bankruptcy -- or to avoid falling into inescapable debt in the first place.
Before we can dive in to the topic of reaffirmation agreements and, thus, answer the question posed in the title, let's discuss some basics about bankruptcy. As you know, when you finalize your bankruptcy, your unsecured debts will be eliminated in the discharge process. This is great because it means that you no longer have an obligation to pay your creditors. However, some of those debts may be attached to important pieces of property assets that you have, like your car.