10 Bankruptcy Myths Debunked
Dealing with debt can be stressful, and the thought of filing bankruptcy can give you even more anxiety. But that anxiety is often based on misconceptions about bankruptcy. In actuality, there are more benefits to filing bankruptcy than you may think. Below, we dispel some common bankruptcy myths.
Myth 1: You Can’t Get a Car or Home Loan After Bankruptcy
Many people believe that they will never again qualify for a car loan or mortgage after bankruptcy. This is just one of many bankruptcy myths the creditors work hard to promote. Although you may have to wait until after your bankruptcy or payment plan to get a new loan, most banks and lenders will extend credit to someone who has been through bankruptcy.
Myth 2: You’ll Never Get a Credit Card Again
This is also false. In fact, you may be able to get a new credit card right after bankruptcy. Secured credit cards can help you rebuild your credit while avoiding common bankruptcy myths.
Myth 3: People Who File Bankruptcy May Go to Jail
There is a lot of stigma associated with bankruptcy and one common myth is that debtors may go to jail. However, as long as you are truthful when filing your bankruptcy paperwork, you have nothing to fear.
Myth 4: Filing Bankruptcy Is Difficult
Although there is a lot of paperwork involved in filing bankruptcy, many think that filing bankruptcy is too difficult and make the mistake of avoiding it altogether. Instead, seek the help of an experienced bankruptcy attorney to help you through the process.
Myth 5: You Cannot File Bankruptcy by Yourself If You’re Married
Not true. One person or both may file individually instead of together. If you and your spouse have many joint accounts, it can be easier to file together; however, if you have a lot of individual debt, it may make sense to file alone.
Myth 6: You Can Only File Bankruptcy Once
In reality, there are no limits on how many times you can file. You may file a Chapter 7 bankruptcy every eight years, or after a Chapter 7 filing, you can file a Chapter 13 within six years. You may file a Chapter 13 bankruptcy every two years; however, you must wait four years before filing with Chapter 7. These time limitations can be complex, so consult a knowledgeable bankruptcy attorney to get answers to your questions.
Myth 7: Bankruptcy Will Ruin Your Credit
In most cases, a person who files bankruptcy is already in so much debt and behind on payments that the bankruptcy does not damage credit at all. In fact, bankruptcy can provide you with the relief you need to rebuild your credit score.
Myth 8: Some Creditors Can Still Sue You
Bankruptcy puts a halt on all collection activities and lawsuits that are related to your debts. If you are dealing with an eviction, repossession, or lawsuit in court, all of those will be put on hold. Although some types of debt cannot be discharged, all creditor actions against you will be disrupted when you file bankruptcy.
Myth 9: Most People Do Not Qualify for Bankruptcy
Although Chapter 7 requires qualification based on income through a Means Test, even those who do not qualify in this manner can seek relief through Chapter 13 bankruptcy. These bankruptcy myths often discourage people from filing bankruptcy and achieving relief.
Myth 10: Bankruptcy Will Ruin Your Reputation
Many people file bankruptcy. It is a personal decision that shows you are taking control of your finances. You do not have to disclose the fact that you’ve filed bankruptcy, and few people will know.
Contact a Bankruptcy Lawyer to Learn More About Bankruptcy Myths
Allmand Law Firm, PLLC has extensive experience helping clients through bankruptcy and beyond. Avoid falling into the trap of believing common bankruptcy myths by speaking to a knowledgeable bankruptcy attorney. Call today at 214-884-4020.