No matter how much you think you may know about personal bankruptcy, there’s no denying that there’s a great deal of misinformation you might be falling for. However, this “misinformation” might do more than lead you astray – it might even prevent you from filing for bankruptcy when you need it most.
So what are some of the most persistent myths about personal bankruptcy out there – and what’s the fact behind the fiction? Take a look:
Myth: Bankruptcy Eliminates All Debts
You may think that bankruptcy might be a quick fix for your debts. However, not all debts get eliminated under bankruptcy law. While your credit card and medical debts will be wiped out under a personal bankruptcy, your student loans , alimony debts, and child support payments will still remain. Therefore, if the brunt of your debts has risen from these specific sources, you may need to find an alternative form of debt settlement other than personal bankruptcy.
Myth: I’ll Have to Sell All of My Assets
There’s a popular myth out there that filing for personal bankruptcy means you’ll lose all of your assets. However, it’s important to note that there are several exemptions that will protect a great deal of your assets, whether you file for a Chapter 7 or Chapter 13 bankruptcy. For example, you’re more likely to keep your home and car in a Chapter 13 bankruptcy, while some exemptions in a Chapter 7 bankruptcy will allow you to keep certain property. Ultimately, you’ll need to consult with your bankruptcy lawyer to determine what property you can keep, and what property will be liquidated to satisfy your creditors.
Myth: I’ll Never Get Credit Again
Many people think that they’ll never get credit once they’ve filed for a Chapter 7 or Chapter 13 bankruptcy. However, nothing could be further from the truth. Many lenders specialize in offering credit to post-bankruptcy consumers. You’ll be required to pay a higher interest rate, so it’s a good idea to stick to the lessons you’ve learned during your credit counseling sessions. After a few years of responsible credit use, you’ll discover that you will be able to get loans at a normal interest rate again. Just hang in there!
Now that you know the truth behind the biggest bankruptcy myths, consider consulting a bankruptcy attorney to determine if it’s the right move for you.