A lot of people have misconceptions about bankruptcy. This has mainly occurred ever since the new bankruptcy laws came into effect in the year 2005.
A large number of people are simply terrified to file bankruptcy due to these misconceptions. Glance through the article to clear your mind of myths before filing bankruptcy.
Myth 1: You will lose all your property
The Truth
One of the most common bankruptcy myths is that you'll lose all your property once you file bankruptcy. This is one of the most common reasons why consumers are afraid of filing bankruptcy.
The truth is bankruptcy laws differ from state to state. Each state has certain exemptions that can safeguard your valuable assets like your home, vehicle, clothes, etc.
Myth 2: You can't file bankruptcy twice
The Truth
This is a myth. The fact is you can file bankruptcy more than one time.
However, under the new bankruptcy laws, the time period between filings has been increased.
- You can file Chapter 7 bankruptcy only once in every 8 years.
- You can file Chapter 13 bankruptcy once in every 2 years.
Myth 3: Filing is a very complex procedure
The Truth
This one is not completely true. It is a fact that the bankruptcy process appears to be a bit complicated to normal consumers, but a good bankruptcy attorney can make the process easy and simple.
Moreover, under the new bankruptcy laws, you can discharge your debts through bankruptcy within 9 months.
Myth 4: You won't secure credit in the future
The Truth
This is again a myth. Even before you get discharged from all your debts, your mailbox may be filled with credit card offers.
However, most of these offers will be from sub-prime lenders. If you have a card with a 0 balance at the time of bankruptcy filing, you won't even have to mention it in your list of creditors.
Myth 5: Everyone will know about your filing
A large number of people suffering from debt problems hesitate to file bankruptcy as they fear that all will know about it and look down upon them.
The Truth
The fact is unless you are a celebrity or a famous person, no one will know you filed bankruptcy apart from your creditors. Currently, the number of consumers filing bankruptcy is so huge that it is just impossible for the media to report everyone's name.
Don't Navigate Bankruptcy Alone
If you're planning to file bankruptcy, it is better to get the help of a lawyer who knows the bankruptcy laws by heart. They can help you understand your available options and make the best decisions.
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DebtCC Admin
Financial Analyst
The DebtCC Admin team is dedicated to breaking down complex financial and legal concepts. We aim to debunk harmful myths and empower individuals with the knowledge they need to overcome debt.