When making the critical decision to file for personal bankruptcy protection, there is a plethora of information available. In these days of the Internet, iPhones, and information about anything available with the dance of our fingers, it is always possible that we may not pick up on the best, or even accurate information.
As with most things, bankruptcy topics have their fair share of myths and untruths that often scare people away from filing, or vice versa. Whether you’re looking to file personal bankruptcy or business bankruptcy, it is essential that you sort out fact from fiction. Avoid a paralegal or document specialist and speak with an experienced bankruptcy attorney, like the Law Office of Brian R. Lewis, who can assist you with all of your fears, worries, questions and doubts.
Misconceptions of Bankruptcy:
Myth #1
One of the biggest misconceptions about bankruptcy is that it is difficult to file. It is actually not hard to file, and in fact, it has never been easier. Most bankruptcy cases can be easily resolved with little or no hang-ups involved. People are also quite concerned with news of a bankruptcy being released publicly, for friends, family and colleagues to find out. The truth is that bankruptcy proceedings are NOT found in public records, and information is only given to the creditors and the debtors of a specific case.
Myth #2
Many people believe that all debts are removed, and it is a fact that they are not. In Chapter 7 bankruptcy, some debts are immune to bankruptcy discharge, such as child support, alimony, taxes and student loans. Though it does relieve the debtor of medical bills, credit card debt, and some legal costs, some debts are just not covered.
Myth #3
Another myth is that people think they will lose everything, being left with virtually nothing if they file personal bankruptcy. Though bankruptcy laws are slightly different from state-to-state, there are exemptions that will allow individuals to protect their home, vehicles, and retirement savings.
Myth #4
For housing, as long as the mortgage is paid on time through the course of the bankruptcy proceedings, there is usually no chance that the home will be liquidated. In Chapter 13 bankruptcy, foreclosure proceeding can be stopped or stalled by a filing. After undergoing debt rehabilitation, making honest payments throughout can avoid another foreclosure, which can happen after the completion of the bankruptcy.
Myth #5
Another bankruptcy myth is that the debtor will never be able to get credit of any kind again. This also is NOT true. Many businesses and individuals who go through bankruptcy proceedings are able to get credit again, though they may often have to start out paying a higher-than-average interest rate on any loan or credit card. Timely payments and no defaults will raise the credit score, once again.
If all the information is too scary or too unsure, there are options to avoid filing for bankruptcy protection. Some debtors look at settling out-of-court with their creditors at a reduced rate. Credit counselors are available to ensure that any alternatives to bankruptcy will not have a negative effect on your credit rating. These professionals are also available to assist in debt consolidation programs, though some debtors are in so deep that they do not qualify for consolidation loans.
If you have any doubt, seek out a knowledgeable bankruptcy attorney, like the Law Office of Brian R. Lewis, to assist you in making the right decision for you, your family, and your business.