Like more formidable situations, bankruptcy has earned its reputation based on true facts, and few too many false ornaments. But once you learn the facts, the bankruptcy is not as terrible as it seems. Here are some common myths about filing for bankruptcy and you need to know before pursuing this option.
Myth: It is difficult to file for bankruptcy.
False. Filing for bankruptcy has become much more streamlined than before, and much of the work can be filed electronically. While there may be a lot of forms and requirements, a qualified attorney with experience in bankruptcy will make the process as simple and painless as possible.
Myth: You will lose all the assets you own.
Bankruptcy laws vary from state to state, but every state has exemptions that can protect certain assets such as your home, car, qualified retirement plans, household goods and clothing needed. Most people who file for bankruptcy are able to keep their vehicles and other necessary everyday items.
Myth: Your credit score will be ruined forever.
Before filing for bankruptcy, your credit score has likely already taken a hit from overdue bills and creditor actions. After filing for bankruptcy, you can get rid of all your debt and start rebuilding your credit. You can easily get a credit card and pay it off every month to improve your score over time. After a certain amount of time, the bankruptcy will also be removed from your report.
Myth: If you are married, both spouses must file.
This one is complicated, but not quite true. It is very rare for one spouse to have a significant amount of debt in their name only. If a married couple has joint debt that they accumulated together, then they can file bankruptcy jointly. If only one spouse is responsible for the debt, he or she can file individually.
Myth: You can only file for bankruptcy once.
If you had a previous Chapter 7 but are filing Chapter 13, the wait is 6 years.
If you had a previous Chapter 13 and are filing Chapter 7, the wait is 4 yeras.
Myth: Everyone knows that you filed for bankruptcy.
Unless you are a very prominent person or a large corporation and the media communication as a whole, the only people who know about your presentation are its creditors.
Myth: People who file for bankruptcy are financially irresponsible.
Most of the people who file bankruptcy do so after falling on hard time. Job loss, a medical emergency, pay cuts, are all unfortunate circumstances that happen to hard-working people.
Bankruptcy is not a sign of failure - it is a means for people to get out of difficult times so they can move forward in life with a clean slate.
If you would like to learn more about filing for bankruptcy in New York, call us for a free consultation.