In Birmingham and throughout Alabama, people have experienced inordinate struggles due to the unforeseen circumstances since early-2020. To help them account for issues like job loss, diminished income, medical expenses and more, protections were implemented so people who had problems paying their rent or making mortgage payments through little-to-no fault of their own would not be evicted or foreclosed upon. This is believed to have avoided an avalanche of bankruptcies. However, those protections were not meant to last indefinitely and with them ending soon, there is a fear that bankruptcies might spike. Those who are unsure of their options for debt relief should be aware of how bankruptcy might help.
Moratorium to end with debtors still in need of help
The moratorium on evictions and foreclosures was extended through July. While that will give respite to many, it does not end their financial woes. According to experts, the current financial landscape is the worst it has been in nearly 100 years as homeowners are increasingly behind on mortgage payments. People who are facing an end to the protections need to act now in understanding how they can take steps to avoid losing their home. Renters should think about avoiding eviction.
Types of bankruptcies available
Personal bankruptcy can be a Chapter 7 liquidation in which all unsecured debts are cleared and certain properties will be taken and sold. Depending on the value of the properties, people might be able to retain some of them. Chapter 13 is like a debt consolidation that lasts for three or five years. Debtors will pay a certain amount to a trustee who will distribute it to creditors. In exchange the person can keep a home, automobiles, collectibles and other properties.
Bankruptcy is a useful tool to get on stronger financial ground
Debtors frequently shy away from bankruptcy because of misplaced beliefs about it. It is not permanent and although it will have a negative impact on credit in the short term, many people who successfully complete the process can improve their credit quickly. Saving a property and keeping from being evicted while clearing various debts can be achieved. This is especially true now with the moratorium set to end. Having advice on bankruptcy, if it is the right step and how to move forward with it is imperative. Professional guidance could help.