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Chapter 7 Bankruptcy Misconceptions

Posted By Allmand Law Firm, PLLC || 1-Jul-2013

Many consumers and small business owners who consider Chapter 7 bankruptcy protection are confused about the process due to many misconceptions or false information. While bankruptcy laws were updated in 2005, there still seems to be a considerable amount of misunderstandings about who can file and whether it damages your reputation. One of the most effective ways in debunking such myths includes getting advice from a bankruptcy expert.

While there are a number of misconceptions about bankruptcy, the following are some of the most common:

  • Bankruptcy will keep me from being approved for credit. This is false. You can apply for credit and many lenders will be willing to work with you. People have successfully obtained credit for a home, vehicle, credit card and more within weeks or months of their bankruptcy case being completed.

  • You can choose which creditors to list on your petition when you file. This is false. Bankruptcy is designed to treat everyone fairly who is included in the process, including debtors and creditors. If you are not being honest about who you owe this may be considered a form of fraud.

  • If Chapter 7 bankruptcy is filed you will lose your home. In most cases this is false. Each state has homestead exemptions that can help you protect your home, including equity.

  • Tax debt cannot be discharged. If your debt meets requirements it is possible to have it eliminated, under specific circumstances.

  • If you are unemployed you cannot file for bankruptcy. This is false. There are qualifications you need to meet in order to file, but if you are unemployed you may still meet such requirements to file a petition. There is legal assistance available for those who are unable to pay filing fees.

  • Bankruptcy will get your fired by your employer or make it harder to get hired. Most employers are not concerned about your bankruptcy filing and they should not treat you any different if you file.

Categories: Chapter 7 Bankruptcy
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