Bankruptcy Myths

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Dispelling Myths About Bankruptcy

The realm of bankruptcy brims with misconceptions, some overshadowing others in prominence yet equally misleading.

While many are familiar with common bankruptcy myths, some of them also merit attention. One such myth suggests that bankruptcy filers cannot obtain a mortgage for over a decade. In truth, individuals may qualify for a mortgage as early as two years following a bankruptcy, depending on their credit rehabilitation efforts.

Another obscure myth is the belief that you can only file for bankruptcy once. Legally, there are specific intervals one must wait between discharges, but there is no limit to the number of filings over a lifetime.

Addressing these myths helps provide a clearer, more nuanced understanding of bankruptcy’s implications. It also alleviates undue anxiety associated with the decision to file.

Chang & Diamond, APC has been providing top-notch legal representation in bankruptcy cases since 1998. During that time, our attorneys have acquired invaluable hands-on experience with a variety of filing types, so they are equipped with operational insight and practical know-how. It is the practical experience that has broadened our expertise and enabled us to deliver excellent results in a wide range of cases.

Filing for Bankruptcy Ruins Your Credit Score

This myth is not necessarily true. Of course, bankruptcy will have an impact on your credit. Most of this impact is negative at first. However, filing for bankruptcy can actually help you begin rebuilding your credit and continue in a positive way.

Bankruptcy undeniably impacts credit scores; typically, a Chapter 7 bankruptcy can dwell on a credit report for up to 10 years. However, rebuilding credit post-bankruptcy is entirely feasible. Starting with secured credit cards, gradually stepping into small, manageable loans, and consistent, on-time payments can foster substantial improvements.

Regular monitoring and careful budgeting play crucial roles in this recovery. Importantly, consistency in financial habits—paying bills on time, keeping credit balances low, and avoiding new debt—can significantly improve credit scores within two to three years post-bankruptcy.

By the five-year mark, diligent individuals often witness their scores ascend to healthier ranges.

This journey, while challenging, underscores the resilience and strategic financial planning necessary to restore one’s fiscal health.

You Will Not Be Able To Obtain Credit or Purchase Anything For 10 Years After Filing For Bankruptcy

This myth is commonly relayed from one person to another. Though a bankruptcy may stay on your credit report for 7 to 10 years, you begin rebuilding your credit through bankruptcy and still may be able to obtain credit and make large purchases.

No One Else is Filing For Bankruptcy

In California, thousands of people file for bankruptcy protection every year; they just may not talk about it. People are tight-lipped when it comes to discussing finances, but be assured that you are not alone. Most of our country is feeling the tightening and stress of the current economy.

The New Bankruptcy Laws Prevent People From Filing For Bankruptcy

Though they may seem more complex, the new bankruptcy laws still allow debtors to file for bankruptcy. You should not let what you have heard about the changes dissuade you from talking to an experienced bankruptcy lawyer about your options.

Filing For Bankruptcy Causes Me To Lose All Of My Assets

Quite the opposite. In many cases, filing for bankruptcy protects your house, car, retirement accounts, and other assets from creditors seeking repayment on loans or other debts. Do not be fooled by the general notions that circulate about bankruptcy.

To get the truth, speak with the personal bankruptcy lawyers at Chang & Diamond, APC. Call us today to schedule your free initial consultation. We offer Spanish-speaking staff members to assist you.

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