Recent economic downturns have made bankruptcy filings more prevalent than ever, but that doesn’t mean that myths about bankruptcy have gone away. If you’re thinking about filing for bankruptcy, you need sound information to help you make the right decision. Read on to learn the truth behind some of the major myths about bankruptcy.
Myth: I’ll have to give up all my property if I file for bankruptcy.
Truth: Depending on which type of bankruptcy you file, you will forfeit little or none of your property. In Chapter 7 bankruptcy, you will have to sell certain items of property that are not subject to exemptions. You can keep some of the equity in your home and car, your retirement accounts, and enough personal property to comfortably start over. If you file for Chapter 13 bankruptcy, you will not have to forfeit any property.
Myth: After bankruptcy, I’ll never get credit again.
Truth: Though bankruptcy has a negative effect on your credit score, you can work to undo this. Within a few years, with responsible financial habits, you may even qualify for a home or car loan. Bankruptcy will stay on your credit report for years, but there is plenty you can do to balance it out.
Myth: Bankruptcy will eliminate all of my debts.
Truth: Bankruptcy does eliminate many debts, like credit card and medical bills, but it has its limitations. For example, student loans, child support, and alimony will survive a bankruptcy.
Myth: Bankruptcy is for deadbeats and losers.
Truth: Bankruptcy is for hard-working Americans who, for whatever reason, find themselves overwhelmed by debt. Do not feel ashamed or embarrassed about filing for bankruptcy. Remind yourself that you’re taking action to resolve your debt and improve your financial situation.
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