The decision to file bankruptcy is a stressful one. Although the number of bankruptcies in the United States is on the decline, it’s estimated that more than one million people will file a Chapter 7 or Chapter 13 this year. A bankruptcy can help you get past a financial setback, but there are many things you need to consider. Most importantly, you need the truth about the law and your situation. Here are a few of the myths associated with bankruptcy:
- Bankruptcy relief is not available any longer – Although the rules have tightened about who qualifies for a bankruptcy, you can still find relief if you meet the eligibility requirements
- People who file for bankruptcy are financially irresponsible – Most of the people who file bankruptcy do so not because they are running up huge credit bills, but because they lost a job, went through a divorce or suffered a serious illness.
- After your bankruptcy, you will be free of all debts – This is untrue. Government student loans and tax debts generally cannot be discharged in bankruptcy, and child support debts cannot be removed. A private school loan may be discharged. If you meet certain criteria, you might be able to discharge your tax debts, and it is possible to have student loans forgiven.
- You will lose all your property in a bankruptcy – Again, this depends on your own situation. Generally, if you can keep making mortgage payments, your house will be exempt in the bankruptcy.
- Bankruptcy destroys your credit – While it is true that a bankruptcy can remain on your credit score for up to 10 years, you should also know that you can begin rebuilding credit as soon as you file the case. You should check your credit following your bankruptcy and make sure everything that was discharged is marked that way.
- Bankruptcy cures your financial situation – Although bankruptcy does offer a fresh start in some ways, in other ways it can change your life. You might lose some of your property. It may also cause you to live more modestly while you’re making repayments.
Bankruptcy is a big decision
Filing for bankruptcy can be expensive and time-consuming, and you may have to attend a class as part of the bankruptcy process. However, it can also be a way to restart your life. You should work with an attorney to find the right solution to your financial situation and make sure that a bankruptcy will offer the relief you need without wasting time.