If your life is in financial turmoil, you may finally be considering filing for bankruptcy. The problem is, you have some doubts and fears. These are probably preconceived notions that just need ironing out.
While it is true that bankruptcy is not for everyone, there are advantages. To see these plainly, you need to get past some misconceptions. Here are four of the most common myths about bankruptcy:
1. You will lose everything
This simply is not true. Many Chapter 7 bankruptcies are “no-asset” cases in which debtors do not give up possessions. Your attorney will tell you that exemptions are available for items that are necessary for you to carry on your daily life.
2. It will ruin your financial future
You will have limited access to credit for seven to 10 years, and you can expect to pay higher interest rates. However, you will be surprised at how quickly your credit score begins to improve in the months following bankruptcy. There are various ways for you to rebuild your credit, too, one of which is to get a secured credit card.
3. All your debts will go away
You have to be realistic about this and understand that while both Chapter 7 and 13 provide relief from most debts, there are some that cannot be discharged through bankruptcy. Examples are recent taxes, child support and student loans. Debts that are dischargeable ordinarily include credit card debt, medical bills and personal loans.
4. People will see you as a failure
Bankruptcy is a financial remedy, not an admission of failure. There are many legitimate reasons for choosing to file bankruptcy. The need to get out from under high medical bills is a common reason, as is divorce or loss of employment. Do not be concerned with what people think; your friends and loved ones will be supportive. With the help of your attorney, you can leave the burden of debt behind and look forward to a brighter future.