Bankruptcy Lawyer | 6 Bankruptcy Myths
Bankruptcy Lawyer . Filing bankruptcy isn’t the most pleasant situation, but with all the myths floating around, it can make it even more difficult to understand.
To clear up any misunderstandings that you may have, we have debunked the following bankruptcy myths:
1. You will be relieved of all debts.
Chapter 7 and 13 Bankruptcy – Both types of filings offer relief from most debt. Some debts, however, are unable to be forgiven. You are usually unable to discharge debts that you are personally responsible for. These debts include child or family support and debts that have resulted in any fraud you have committed. Student loans are commonly not forgiven, either.
The debts that you can discharge from are medical bills, credit cards, and personal loans.
2. You can’t relieve taxes.
Actually, you can get rid of IRS and state income tax debt. In order to qualify, though, the debt must be three years past due or more and not assessed within the past 240 days. In bankruptcy terms, income tax debt can be unsecured, secured, or priority and the debt’s character must be identified before filing.
3. You will lose everything you own.
It’s a common misconception that filing bankruptcy means losing your car, home, and other assets. In many cases, you are able to keep most of your possessions.
Chapter 7 Bankruptcy – Many times these are no-asset cases. This means that the debtor is not required to give up any possessions. Typically, you can hold on to exemptions that are necessary for your daily life, these are called exemptions. The exemptions vary from state to state so it is best to discuss this with your bankruptcy attorney. Also, many times creditors aren’t interested in your exemptions even if they are covered under the law.
Chapter 13 Bankruptcy – Since this type of filing includes a repayment plan, you are able to keep your assets. However, their value does play a role in your repayment plan.
4. Your credit will be ruined forever by filing bankruptcy.
Yes, your credit will take a big hit initially. As soon as you file, the bankruptcy will be placed on your credit report and will stay there for 7 to 10 years. Every year, however, the affect it has on your ability to get a loan decreases. Many people actually see an increase in their score after a couple months. Further, you can rebuild your credit following the filing of bankruptcy by, for instance, applying for a secured credit card.
5. You can’t file bankruptcy alone if you’re married.
The truth is, you can file for bankruptcy alone even if you are married. The bankruptcy official will likely want to see proof of your spouse’s income to make sure that he or she isn’t very wealthy, but the filing will affect you only. Filing will not affect your spouse’s credit and all of your spouse’s assets will be safe.
6. It’s financial ruin.
The truth is, no one wants to file bankruptcy. Nearly everyone that files is a good person, hard working, and honest. In fact, a Harvard University Study found that a large percentage of bankruptcies are somehow linked to a health crisis. Even if that is not the reason for your filing, most people who file are not failures and simply made a mistake along the way or happened upon an unfortunate situation. Whatever your reason is for seeking debt relief, bankruptcy is a helpful tool that allows you to take control of your finances.
The myths related to bankruptcy can make it difficult to know what is true and what is false. While we have debunked a few of the misconceptions here, an experienced bankruptcy lawyer can answer any questions you may have or clear up any confusion. – startfreshtoday
Bankruptcy can be scary, but contact an experienced bankruptcy lawyer, contact Pinkston & Pinkston.