People often spread rumors about bankruptcy because they don’t always understand what it means. Because of this, bankruptcy gets a bad rap, which can cause the people who need it most to bury themselves in debt.
Making the most informed decision sometimes means debunking common myths – here’s the truth about bankruptcy:
Myth #1: No one needs bankruptcy
Truth: Plenty of people lose track of their debt and need help. Debt is very easy to pick up, especially when making necessary purchases to improve your life or sudden expenses like medical bills.
Myth #2: Bankruptcy will take everything you own
Truth: Chapter 7 bankruptcy may liquidate some assets, but most people who qualify have little or nothing to lose. Many assets qualify for exemptions and end up protected from liquidation. Chapter 13 bankruptcy, conversely, will help reorganize your bills and allow you to still keep assets that might not otherwise be protected.
Myth #3: Your credit score is ruined forever after bankruptcy
Truth: Your credit score will likely take a hit, which means it may be some time before you make larger purchases. However, you can raise your credit score back up after filing for bankruptcy within a year or two.
Myth #4: You can file bankruptcy whenever you have debt
Truth: You will have to wait before filing for bankruptcy again after the first time. Depending on which bankruptcy you filed for first, you could be waiting between two to eight years before filing again.
Myth #5: You should file for bankruptcy on your own
Truth: It is best to reach out for legal help when filing for bankruptcy. There may be assets and debts you didn’t consider when initially filing for bankruptcy. and legal guidance can help you better understand your position.