Filing bankruptcy is scary for a lot of people. Many see it as a sort of failure, but that isn’t completely a bad thing. If you are thinking of filing bankruptcy, it means your financial management has already fallen short of what you would have liked it to be. Sometimes filing bankruptcy simply means you have admitted your own limitations and are ready to regroup and do better.
Consumers believe many myths about bankruptcy that prevent them from learning more about the benefits and freedom of filing for bankruptcy. There are several myths surrounding filing for consumer bankruptcy. It is important to address each of them so you understand the true impact of bankruptcy before deciding if it is right for you.
Myth #1: The bank will take everything I own
If you have a lot of assets, you might have to let go of some of them, but no one expects you to carry on with nothing. Both a Chapter 7 liquidation bankruptcy and a Chapter 13 debt reorganization plan allow you to keep a certain amount of property and will let you make payments on debts that don’t qualify for bankruptcy.
Myth #2: My credit will be ruined
Bankruptcy is a negative hit on your credit. This is true. A bankruptcy typically stays on a credit report for seven to 10 years, but it will make less of an impact as time goes by. Making late payments and carrying high balances with little progress toward reducing your debt is also a less than pretty sight on your credit report. Overall, the impact is probably less than you think, and you can use what you learn to rebuild your credit responsibly sooner than you might think.
Myth #3: Any lawyer can help file for bankruptcy
There are some general practice “full service” lawyers that help people file Chapter 7 liquidation bankruptcies. In order to determine what type of bankruptcy is right for you, depending on where you owe money and what assets you have, it is important that your attorney know the ins and outs of Chapter 7 and Chapter 13 bankruptcy. There are benefits and drawbacks to each method so careful consideration should be made to figure out which type is best for you.
Understanding and dispelling the myths around bankruptcy should help you learn more about your options for a better financial future.
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