Bankruptcy Myths: Sieve Fact from Fiction

  • Bankruptcy Myths

Bankruptcy Myths: Sieve Fact from Fiction

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Most of the clients who have been struggling with dwindling fortunes contemplate bankruptcy but have their fears around the topic. Los Angeles based bankruptcy law firm lawyers say that most of these are mere misconceptions created to keep unaware and innocent people under continuous debt. Often people file for bankruptcy when they are left with no other option. It will be surprising to know that most of the myths are just misconceptions to scare people from filing for bankruptcy.

Here are some of the common misconceptions regarding bankruptcy:

  • Credit is ruined

One of the most common myths is that bankruptcy ruins the credit and getting over it is impossible. Well, for starters, people who are filing for bankruptcy, probably have a bad credit score. Bankruptcy won’t take it any lower. In fact, bankruptcy wipes your slate clean. Though bankruptcy appears on your credit report for a maximum duration of 10 years, all bad credit will be removed.

Filing for Chapter 13 bankruptcy will give you a new credit even during your repayment plan, with permission from the court. Chapter 7 bankruptcy, on the other hand, gives you a discharge in no time and you will soon be having new credit offers. Since there are no debts remaining after the bankruptcy discharge, you become an ideal candidate for fresh credit. However, before opting for nay it is important that you check the interest rates. with timely payments, you can improve your credit score and get credit cards with good interest rates too.

  • Personal failure

You should not consider bankruptcy filing as a sign of personal failure since many times people fall into bad times. Getting the pink slip, sudden illness or divorce can be reasons most people haven’t anticipated. Such problems are generally not catered to in the normal course of events and can throw anyone’s finances in a ditch. Bankruptcy is designed to make life easy for these genuinely honest people who have hit a rough patch.

  • You lose everything in bankruptcy

Unlike the false stories circulating about bankruptcy, you can save most of your belongings thanks to the federal and state bankruptcy exemptions. Every state has a different limit of the homestead, personal property, vehicle, wild card exemptions, etc. which can be used to protect your equity in the property. Additionally, your retirement accounts and pension funds are protected during bankruptcy.

  • Bankruptcy will become public knowledge

Though bankruptcy filing is public record, not everyone will come to know of your bankruptcy, since every day numerous people file for bankruptcy. unless people are specifically searching for your credit score, they won’t be aware of your bankruptcy filing.

  • No money to hire an attorney

If you are thinking of filing for bankruptcy under Chapter 7 or Chapter 13, you can use the debt payment money to hire the attorney. Since the majority of debts are unsecured types, they get discharged in a Chapter 7 bankruptcy; while Chapter 13 allows you to catch up past due payments. This way you won’t affect your chances of getting your debts discharged through bankruptcy.

Despite whatever you have heard bankruptcy is not a complicated and difficult process. With experienced bankruptcy attorneys by your side, things go very smoothly. They will help you decide which chapter of bankruptcy would be best to save most of your assets while getting rid of the majority of debts. You can call 888-297-6023to to discuss your case with skilled bankruptcy lawyers.