A lot of people have misconceptions about bankruptcy. This has mainly occurred ever since the 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 off myths before filing bankruptcy.
Here are the 5 bankruptcy myths and truths you should be aware of:
Myth - You will loose all your property
Truth – One of the most common bankruptcy myths is that you'll loose 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 home, vehicle, clothes, etc.
Myth – You can't file bankruptcy twice
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 – Bankruptcy filing is a very complex procedure
Truth – This one is not completely true. It is a fact that bankruptcy process appears to be a bit complicated to normal consumers. However, 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 – You won't secure credit or any loan in future
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 0 balance at the time of bankruptcy filing, you won't even have to mention it in your list of creditors.
Myth – Everybody will be informed about your filing bankruptcy
Truth – 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. However, 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.
Finally, if you're planning to file bankruptcy, it is better to get help of a lawyer who knows the bankruptcy laws by heart. It is true that the process of filing bankruptcy seems to be a bit complex but the lawyer can help you in understanding the available options and making best decisions.