Bankruptcy Myths Exposed

Bankruptcy is surrounded by many myths. Some are true, some are not, and some are merely rubbish. People often refrain from filing for bankruptcy when they truly need it just because they are afraid of it. Just like children who are afraid of the dark. Utter fear of the unknown. This article seeks to debunk the most common myths related to bankruptcy, read on and find out more!

Myth #1: If I File… I Will Lose All Of My Assets And I Will Have To Start Over

This is not true at all. The type of bankruptcy determines how many of your assets can be seized. And still, the state has laws which protects debtors from losing certain types of assets, such as your property, your car, your clothes, etc.

Myth #2: If I File… I Will Never Be Able To File Again

This statement is also false. Of course, there are limitations to the frequency of the bankruptcy claim, but it is not a one-time-only procedure. Chapter 7 bankruptcy can only be filed once every 8 years. Regarding a reorganization bankruptcy (Chapter 13), the frequency increases, but you may not file again if your previous file has not been discharged yet.

Bear in mind that it is never a wise idea to file over and over again, it will probably do more damage than good.

Myth #3: If I File… My Credit Rating Will Improve

Pure nonsense. You feel that just because your debts are a thing of the past, your credit score will automatically raise up to a perfect 850? A bankruptcy input on your credit report is one of the worst inputs a report can have. This negative record may stay on your report up to 10 years, no matter the discharge of the claim.

Myth #4: If I File… I Will Never Get A Loan Again In My Life!

People tend to be overly dramatic at times, and this statement clearly proves it. How many times have you heard it? Countless. It is just not true. You will see that a few months after filing a bankruptcy claim, credit card offers will start arriving again in the mail.

As regards loans, if you have just filed and you are thinking of buying a new car or a property, think twice. You will find it hard to receive finance, and even if someone is willing to fund your project, interest rates will be sky-high. The best thing to do is to wait a couple of years to get your life back on track, and then apply for a mortgage loan or an auto loan, your eligibility will be the same than that of someone who has never filed for bankruptcy.

Myth #5: If I File… Creditors Will Cease To Harass Me

At least some truth. The law protects the debtor against collector’s harassment once the claim has been filed because all of your debts are put on hold and may not be collected. Collectors breaking the rules will find that the debtor may take a cause of action against them.

We have exposed the most ordinary myths related to bankruptcy. Now that you know what is real, and what is not, you will be able to make a more informed decision.