At any given moment your personal economic status may rise and fall in time with the global, national, state and local economies. There is nothing any one person can do about an economic downturn, and that may make seeking a bankruptcy unavoidable.
Most feel hesitant to file for bankruptcy because they’ve heard many negative things about it. Most bankruptcy myths cause people to face their debts on their own, without pursuing options to retain control of their financial futures. This leads to out of control debts and an intense amount of stress. Here are a few myths that we want to dispel for you:
Filing for bankruptcy will automatically ruin your credit rating and financial status forever.
You will not necessarily ruin your entire financial future if you file for Chapter 7 or Chapter 13 bankruptcy. While it is true that both types of bankruptcy will remain on your credit report, eventually they do expire. And, even before they expire, you can improve your credit.
You will lose everything you own
This is one of the most damaging pieces of misinformation. Bankruptcy offers two prominent strategies for dealing with debt:
- Liquidation: the sale of assets to address debts.
- Reorganization: the creation of a new payment plan for your debts.
But Chapter 7 Bankruptcy – which uses the liquidation model – allows debtors to keep some of their assets. With Chapter 13 Bankruptcy, since the debt is “reorganized” you have a much greater opportunity to keep your assets.
Bankruptcy immediately removes 100% of your debt.
There are certain debts you cannot discharge, meaning you cannot get rid of them through bankruptcy. Such debts might include student loans, child support or restitution the court has ordered you to pay after a car accident.
Bankruptcy means you’re out of options
That is patently false. If you feel you must file for bankruptcy, you may have more options to restore your finances than you realize. To take the next step, it is in your best interests to speak with a qualified, dedicated bankruptcy attorney about your options.