When it comes to bankruptcy there is a lot of misinformation floating around. Many debtors considering bankruptcy often listen to the half-truths and outright myths about bankruptcy instead of getting the truth from qualified sources. Let's take a look two of the most common myths out there about bankruptcy and get to the bottom of the truth.
Myth: Bankruptcy will ruin your credit for 10 years and you will not be able to buy a home, car, get credit cards or even rent an apartment.
Fact: While Chapter 7 bankruptcy will remain on your credit report for 10 years and Chapter 13 bankruptcy will remain on your credit report for 7 years, it is not the credit destroying beast that many make it out to be. The truth is that many debtors who file bankruptcy already have extremely low credit scores and some experience an increase in their credit score after a bankruptcy discharge. Why? Because when bankruptcy discharges debt and brings the balance to $0, it can improve a debtor's debt to income ratio. Also, many debtors are able to purchase a car, home and even get unsecured credit cards 2 to 3 years after bankruptcy. And even immediately following a bankruptcy many debtors obtain secured credit cards which will help them further improve their credit score
Myth: When you file bankruptcy, the "authorities" will come to your home and seize your car, clothes, jewelry, books and pet goldfish.
Fact: Bankruptcy is designed to save a debtor's assets. Bankruptcy law allows many generous exemptions that can help the debtor to keep their home, car and personal possessions. It is a distortion to say that debtors who file bankruptcy will need to give up all of their personal assets. This just is not the truth. A bankruptcy attorney will work with the debtor to use all of their bankruptcy exemptions wisely so that their most important assets are protected.