When it comes to bankruptcy, most of the concerns are probably based on old myths and misconceptions surrounding what whole aspect. While creditors work hard to promote these misconceptions, the truth is there are usually more advantages than disadvantages when filing for personal bankruptcy. If you are considering bankruptcy but are afraid about what you have read or heard others say; don’t worry, this article seeks to highlight and address all of the myths, lies and misconceptions bankruptcy.
Bankruptcy Kills Your Credit Permanently
Under no circumstances will a bankruptcy completely terminate your credit. Sure you can expect limited access to credit and for the seven to 10 years that a bankruptcy remains on your report, but the effects are not permanent. In fact, you’re likely to receive credit card offers within weeks of your debt discharge. Granted, those cards will be secured cards with a low limit.
It’s astonishing how quickly credit scores can recover from bankruptcy. There are people who have successfully purchased new homes, and vehicles a few months after the bankruptcy is concluded. With proper planning and counseling, you can get new credit much sooner than you expect.
Bankruptcy Clears All Your Debt
Many file for bankruptcy hoping for a clean slate and fresh start, which isn’t often the case. bankruptcy will discharge most unsecured debts such as personal loans, utility bills, credit card charges, medical bills, and rent arrears. it can even relieve you of secured debts under certain circumstances, but not all debt can be discharged in bankruptcy. Debt arising from child support and spousal support cannot be removed under any circumstances. The same also applies to student loans.
You’ll Lose Everything in Bankruptcy
If you file for bankruptcy you can be rest assured knowing you won’t be left out on the street with nothing to your name other than your innerwear. Most property in a bankruptcy filing is exempt and debtors rarely lose anything at all. Assets considered exempt do vary depending on where you live but your house, vehicles, and clothes are safe.
Even the items that aren’t exempt creditors often don’t want. Your flat-screen TVs and watches are worthless to a creditor.
You can only file for bankruptcy once
There’s always the chance you may find yourself in a financial crisis more than once in your lifetime. Luckily, you can file for bankruptcy more than once should you need to. Normally bankruptcy can be filed once every eight years.
Nonetheless, just because you can file for another bankruptcy doesn’t mean you should. Multiple bankruptcies do not look good and can deteriorate your credit rating. It’s best to only file for an additional bankruptcy if it’s absolutely necessary.
Bankruptcy Filers are Financially Irresponsible
It’s easy to look at those who file for bankruptcy as reckless when it comes to spending and managing their own finances, but more often than not, bankruptcy is not the result of a personal failing. In fact, the three major causes of bankruptcy are divorce, severe illness, and job loss. Many avoid bankruptcy fearing it as an admission of failure or character flaws. However, bankruptcy is a financial remedy that is available for a reason.
Long-term unemployment, medical fees and expenses, the legal fees, and support costs associated with divorce, and the high cost of medical care have driven many individuals into bankruptcy.
No lender will want to associate with you
This is also False. Many lenders understand the problems with our economy and the affect of this crisis on consumers. So many will offer credit to those affected by bankruptcy. While interest rates may be higher, you can still get credit, despite a bankruptcy filing.
Married couples will both have to file
Assuming you and your spouse both need to file for bankruptcy is assuming you both share the liability for the debt. It’s not unusual for one spouse to have a significant amount of debt solely in their name. In these cases, it’s best to file for bankruptcy alone.
However, if the debt is shared between spouses then both should file. If both spouses are liable for the debt and only one spouse files, then creditors can demand payment in full from the spouse that didn’t file.
It’s hard to file for bankruptcy
It’s actually quite the opposite. Technically speaking, you don’t even need a lawyer to file for bankruptcy. You can fill and file all of the paperwork yourself. However, it’s not recommended you file without legal aid. There are a few components that you could unknowingly mess up. You could file under the wrong chapter, incorrectly cite property exemptions, or even fail to adequately defend against an action seeking to deny discharge.
In many cases, people file for bankruptcy completely unaware that there are other alternatives available to them that may be a better fit for their situation. In any case, it’s best to consult with a legal practitioner first to discuss your options.
