Common Bankruptcy Myths
Understanding You Are Not Alone
Currently in the United States there are over 310 million people residing within our nation. Of that huge number, there were nearly 1.5 million bankruptcies filed in 2011 alone. In the past few years, bankruptcy has been on the rise with the change in the economic condition. This may come as a shock to some people who see filing as a devastating choice and an end-all decision. When it comes down to it, bankruptcy is a valid option for many American families who desperately need help and have no idea where to turn.
Explaining These Financial Fallacies
There are many misconceptions about bankruptcy that hinder a decent amount of families and individuals from taking the chance to free themselves from their debt. Below we have detailed some of these myths and explained why they are nothing more than talk.
All of your debts can be dismissed with bankruptcy.
While filing Chapter 7 bankruptcy may discharge almost all of your debt, there are still certain exceptions. It can get rid of credit card debts as well as medical bills, but it cannot get rid of back taxes like Chapter 13 bankruptcy can. With both types of filing, you cannot get spousal support, child support or student loans dismissed. There are pros and cons to each form of bankruptcy and it is best to speak with a knowledgeable attorney before you pursue either.
Filing for bankruptcy will make you lose your home and assets.
This is entirely not true and unfortunately this myth is often what scares people away from bankruptcy in the first place. When filing under Chapter 7, you are allowed to keep anything that has been titled as exempt according to state laws. Furniture, clothes, home equity, basic tools you need for work, cars that are not too expensive and other household goods are all items that can typically be kept. Chapter 13 filings allow you to keep all of your possessions.
Your credit is ruined after bankruptcy.
As soon as you are finished with the bankruptcy process, you will often receive credit card offers in the mail. It is strongly recommended that individuals coming out of bankruptcy obtain a secured credit card with a very low limit within the first month after their debt has been discharged. By making on-time payments each month, slowly your credit will begin to rebuild itself within 6 to 12 months. Beware that if you begin to make late payments, your credit score will definitely not improve.
Individuals may file for bankruptcy multiple times, whenever they want.
According to certain stringent laws, you may only file for Chapter 7 bankruptcy if it has been a minimum of eight years since you last completed this form of bankruptcy. When seeking Chapter 13 as a solution, debts will not be discharged within two years of a previous filing or within four years if they went through a Chapter 7, 11 or 12 bankruptcy prior to seeking a Chapter 13.
Finding Clarity with Debt Relief
As much as it helps to read through myths and decipher the truth about bankruptcy, nothing is quite like speaking with a legal professional on this topic. Our firm has over 20 years of experience working with all kinds of financial situations that people deal with on a regular basis.
It is important to realize that it is a fairly common occurrence for individuals to file for bankruptcy. Do not be embarrassed but understand that we are here to assist you. Allow yourself to be from the overwhelming stress that can often come from these types of situations. Contact our office for a free initial consultation today by calling us at (866) 210-1722!