Filing for bankruptcy is a huge step for any individual, and can put you in an awkward and unpleasant situation. A lot of myths perpetuated by those who understand little about how bankruptcy works via the internet are certainly not making it easier for individuals who need to take this huge step in their lives. This is why our seasoned San Diego bankruptcy lawyer group has decided to take a closer look at the worst of these viral myths and address their verity once and for all.
All Debts Will Be Relieved
While both chapter 7 and 13 bankruptcy will relieve most debt, there are some types that cannot be forgiven. Personal debts like family or child support, debts stemming from a fraud you committed or, in most cases, student loans will not be forgiven. Debts that will be discharged include credit cards, loans, medical bills, etc.
You Will Lose Everything
Most individuals are scared of the perpetuated myth that filing for bankruptcy means they will lose their cars, homes and other possessions. However, filing for bankruptcy does not necessarily mean losing all your assets. If filing for Chapter 7 bankruptcy, you will not have to give up any assets. You can hold on to possessions that facilitate your daily needs like your car, which falls under the category of exemptions. Exemption laws vary from state to state, which is why it is best to get in touch with an experienced bankruptcy attorney. Since filing for Chapter 13 bankruptcy involves a repayment plan, you will be allowed to keep your assets. However, they will have a significant impact on your repayment plan.
Your Credit Score is Forever Ruined
It is true that your credit score will be bad in the beginning. Filing for bankruptcy is introduced to your credit report and will be there up to 10 years. However with every passing year the bankruptcy will have a reduced impact on your ability to ask for a loan. Most individuals even experience an increase after a few months. There is a number of ways you can repair your credit score, and it is best to consult with an expert in the field.
Married Individuals Cannot File for Bankruptcy on their Own
This myth is completely untrue, and you can file for bankruptcy on your own even if you are married. The only prerequisite is to assure the bankruptcy agent that your spouse is not extremely wealthy by offering insight into their income state. This way filing for bankruptcy will only affect you. It will not have any impact on your spouse’s credit or possessions.
It Will Ruin You Financially
Individuals filing for bankruptcy are usually hard-working, honest citizens and are reluctant to take this step. Whatever reason you have to file for bankruptcy, you need to remember that all of us are prone to taking a bad step and ending up in a difficult financial situation. But filing for bankruptcy is not your ball and chain, it is a way to help you regain control of your finances.