Freedom from debt often requires sacrifice. Bankruptcy can offer a path out of debt, but it is important to understand the process.
As you consider your debt relief options, you might be wondering how Chapter 7 bankruptcy will change your life.
Will I lose my house?
The threat of homelessness is a common fear for people facing bankruptcy, especially if they have families to provide for.
The homestead exemption protects a certain amount of equity in your home. In Missouri, this amount is $15,000. If you have less than $15,000 in equity in your home, it will likely be exempt from liquidation. However, if you have more than this, the court-appointed bankruptcy trustee may sell your home to pay off your creditors.
What about my car or work tools?
You may fear that bankruptcy will leave you without a means to get to work or earn a living. Fortunately, Missouri bankruptcy exemptions protect up to $3,000 in equity in a motor vehicle and up to $3,000 in professional books or tools.
Will my credit ever recover?
When you file for Chapter 7 bankruptcy, your credit will probably drop significantly. The bankruptcy will remain on your credit report for 10 years. However, you will likely have opportunities to rebuild your credit during this time.
A secured credit card is one tool you can use to rebuild credit. This type of card has a low limit and requires a security deposit. Demonstrating responsible borrowing with a secured credit card can help you boost your credit score.
There is no fast track out of debt. Bankruptcy is not an instant or easy solution, but it can be the start of a long-term recovery plan.