Bankruptcy is a process that offers relief from overwhelming debt. Although a lot of people think that bankruptcy must not be thought about, this process is a significant legal tool designed to offer legal or alternative options to manage crushing debt.
Bankruptcy offers a fresh start to people who are struggling financially. But still, a lot of things need to be clarified about this process. Such misconceptions can confuse and prevent individuals from leveraging the benefits this legal process can offer. As long as you have the best bankruptcy attorney on your side, you can gain the most benefits out of this process. To find the best attorney, click here. Meanwhile, below are common bankruptcy myths you should not believe if you want to free yourself from the financial burden you are currently carrying:
You Fail in Life if You File for Bankruptcy
Filing for bankruptcy is supposed to help you get a fresh start financially. It’s not meant to be a reflection of your worth as an individual or character. Sometimes, debt can hit you hard and bankruptcy offers a way to deal with the situation.
A lot of popular and successful individuals have filed for bankruptcy. Sometimes, this process is a strategic option to best handle a financial situation.
Filing for Bankruptcy Means Being Credit-Damaged Permanently
Although bankruptcy will affect your credit score, it does not permanently stain your credit report. A lot of people can rebuild their credit following bankruptcy. Likewise, bankruptcy can help improve your credit. For instance, if you are delinquent on your maxed-out credit or accounts, your credit score may be under 600, which is difficult to improve, regardless of timely payment. After filing for bankruptcy, no debt reporting happens, and new accounts that have a good payment history will steadily help your credit score.
Did you know that you may be able to purchase a vehicle with a car loan after bankruptcy? The loan interest rate can be better a few months after discharge. Also, you can expect to get a car loan and credit card offers once you file for Chapter 7 bankruptcy because creditors are aware of your inability to file for this type of bankruptcy for eight years. Thus, you are a decent credit risk for these creditors.
You will Lose All Your Possessions After Filing
If you file for Chapter 7 bankruptcy, your creditors will be paid off by selling some of your assets. But this does not mean you cannot keep anything like your car or house. Every state differs in terms of the at-risk property in bankruptcy cases. Because there are a lot of ways to protect assets, do not sell or transfer assets before you file bankruptcy until you consult with a lawyer.
Under Chapter 7 bankruptcy, only some assets are liquidated. You can keep your assets since they are protected. If you file for Chapter 13, you can keep all your assets; however, there is a long-term payment plan you must follow.
Bankruptcy Filing is Time-Consuming and Complicated
Filing for bankruptcy involves some paperwork, but this is a straightforward process overall. A skilled lawyer can guide you through this. A bankruptcy petition includes plenty of financial information like income, assets, expenses, debts, property transfers, payments, and more. Typically, a Chapter 7 bankruptcy lasts from 3-4 months while Chapter 13 often lasts between 3 and 5 years.
Bankruptcy is a Costly Process
Filing for bankruptcy involves a reasonable cost. For a lot of people, a bankruptcy attorney can be paid for rather than making minimum payments for their credit cards, which can be between 3 and 5 months. Also, if you cannot afford a lawyer, there are options you can explore.
