Many consumers try to avoid bankruptcy mostly because of false misconceptions and a lack of understanding. While filing may have its pros and cons, it often depends on the situation of the individual. When considering bankruptcy it is important to get sufficient information that can help you make an educated decision about your finances. Get caught up with the facts instead of getting confused and mislead by myths that may not be true.
- All debts in Chapter 7 bankruptcy get discharged. Most unsecured debts are discharged but certain obligations such as back taxes , student loans , back child support and debt incurred related to fraud are not eligible.
- When you file bankruptcy you lose everything. If you do your homework on the process, you’ll learn about exemptions available that help protect personal property including your vehicle, home, retirement accounts and more.
- Married couples have to file bankruptcy together. Unless you have a good amount of debt between the two of you, this isn’t true. Again, this varies depending on circumstances of the situation. In most cases a spouse can file on their own, especially if debt is in the name of the filing spouse only.
- You can’t get back taxes discharged in bankruptcy. Back taxes can be discharged but under specific qualifications. If this is an option you are considering you’ll need to review your situation with a tax professional or bankruptcy expert.
- Bankruptcy can be filed only one time. Not true. Yet, there are limitations to be aware of. You can file Chapter 7 again after 8 years, file Chapter 13 again after 2 years and you’ll need to wait 4 years if you are going to a Chapter 13 case from a Chapter 7.
- Credit can’t be obtained after filing. Not true. Checking interest rates of potential lenders is something you’ll want to study before inquiring for credit.