4 Bankruptcy Myths
4 Bankruptcy MythsBankruptcy has become more widely accepted, but it is still not without stigma. There are plenty of myths out there and far too many of these myths are accepted as truth about bankruptcy. People hear the myths and allow themselves to be fooled into not filing or postponing filing. This can end up costing more and putting more of your assets at risk.
The trick to using bankruptcy successfully is to not believe the myths. If you are considering bankruptcy as an option for helping with your financial situation, research your options and learn for yourself whether you’ve been fooled by these common bankruptcy myths.
Myth1: Bankruptcy Will Wipe Out All of My Debts
We’ll begin with a myth that actually makes bankruptcy seem more favorable than it is to everyone. Many people believe this myth and jump into filing because they believe it will eliminate every debt they have. This is not necessarily true.
Bankruptcy can give you a fresh start and it’s likely to eliminate many of your debts if you file for Chapter 7. However, there are certain types of debts that cannot be eliminated. You can read about debts that can and cannot be discharged in bankruptcy in this article from The Balance.
Furthermore, if you file for Chapter 13, you’ll actually be paying your debts throughout the process. A portion of your overall debt load might eventually be eliminated, but that “free and clear” belief some people have about bankruptcy might not be the case for you.
Myth 2: Filing for Bankruptcy Means You’ll Lose Your Home
This myth is untrue and leaves out an important fact about bankruptcy – filing might actually be the only option you have for keeping your home.
Every situation is different, which is why it’s important to work with a bankruptcy expert. Depending on the value of your home you could have several options that would allow you to continue living in it.
This benefit applies even if you’ve been threatened with foreclosure. Bankruptcy can stop foreclosure proceedings and make it so the mortgage lender isn’t even allowed to contact you directly anymore.
Myth 3: Filing for Bankruptcy Will Permanently Scar Your Credit
It’s true, bankruptcy will have an impact on your credit. However, that impact is unlikely to be as damaging as ongoing debt issues you never resolve.
People who warn you that bankruptcy will ruin your credit likely have pretty good credit. And if you’re considering bankruptcy chances are your credit score has already taken a beating.
The truth is bankruptcy is only temporarily on your credit report. After 10 years or less it drops off and most lenders have no idea you ever filed. Furthermore, those who file for bankruptcy gain access to tools that can help them re-establish credit after filing.
Myth 4: You Can Save Money with a DIY Bankruptcy
Though it’s possible to file for bankruptcy on your own, it’s never advisable.
Filing for bankruptcy can seem like a straight-forward process until you are actually involved in it. This is especially true if you have assets you want to protect.
In addition to your assets, you also need to take into account that if you make a mistake – even an honest mistake – it can cost you the opportunity to file. It could even get you into legal trouble. If the bankruptcy court has any reason to suspect fraud, even if you didn’t intend to do anything wrong, it can treat you as if you intentionally tried to commit bankruptcy fraud.
If you are considering bankruptcy and you want the process to be free of complications and surprises, we can help. Contact Bankruptcy Attorney R. Flay Cabiness, II, P.C. at (912) 554-3774 (Brunswick, GA); (912) 375-5620 (Hazlehurst, GA) or; (912)-554-3756 (Jesup, GA).
