Many people have several misconceptions about bankruptcy. These are misconceptions not just about the process, but about the fallout that happens after as well. These misconceptions could hold some people back from filing for bankruptcy, which is not a good thing.
While bankruptcy should be taken seriously, it is often not as scary as you might think. Some people fear bankruptcy so much that they won’t even toy with the idea of filing. In many cases, this will be a mistake as there are limited options if you are having a difficult time paying your bills or if you are about to lose your home.
Before making the decision to file for bankruptcy, you need to make sure that it is the right option for you. And it is difficult to make the right decision if you believe the myths surrounding a bankruptcy.
The Law Offices of Loomis and Greene, your bankruptcy lawyers in Loveland, offer bankruptcy myths you should stop believing.
All of My Debts Will be Cleared
The types of debt likely to be discharged in bankruptcy include things like medical debt, credit card debt, past-due utility bills and business debts. Unpaid back taxes may even be wiped out after filing for bankruptcy, but you have to meet certain requirements.
That said, there are debts that will probably not be excused when filing for bankruptcy. For example, student loans are very difficult to get discharged. Child support and alimony cannot be discharged.
I Will Lose My House
There is a chance that you can lose your home, but that isn’t always the case. If you can keep up on your mortgage payments, losing your home is very unlikely.
I Can File on My Own
One bankruptcy myth involves the use of an attorney. Some people think that they don’t need an attorney to file for bankruptcy. Well, you don’t, but we sure don’t recommend it.
Bankruptcy is a complicated legal process that requires a lot of paperwork to be filled out. Your petition can be tossed by a judge even for the simplest of mistakes. It would be silly and foolish not to have an attorney when filing for bankruptcy.
There are success rates that make it very clear the difference between filing on your own and hiring a lawyer. For chapter 7 bankruptcy, people who represented themselves saw a 66% success rate. However, people with an attorney will see a 92% success rate. That is a huge difference.
People who failed to hire an attorney filing for Chapter 13 saw a dismal 2% success rate.
Financing Will Be Impossible
The idea that you won’t be able to borrow money for a long period of time makes people understandably nervous. But filing for bankruptcy does not mean you can never get a loan or credit card again. And you won’t have to wait seven to 10 years to get a loan or credit card either.
There are people who get new credit cards within a year of filing for bankruptcy and some who were able to get an FHA loan within two years after a bankruptcy.
Bankruptcy is a Sign of Personal Failure
This is far from the truth. No two financial situations are the same and many people head down the road of bankruptcy because they wind up in a situation that is out of their control. For example, bankruptcy can come about due to a divorce, illness, loss of a job or other life events in which you have no or little control over.
There is no shame in filing for bankruptcy.
Your Credit is Ruined Forever
Bankruptcy will definitely have a negative impact on your credit, there is just no way around that. But this won’t last forever and your score might not drop as far as you fear.
A Chapter 13 bankruptcy will stay on your credit report for seven years, a Chapter 7 will stay on your credit report for 10 years. However, the farther in the rearview mirror the bankruptcy gets, the less negative weight it will carry.
Everyone Will Know That You Filed for Bankruptcy
Unless you are famous or talk a lot, nobody will know that you filed for bankruptcy. While bankruptcy is a matter of public record, unless someone is seeking you out specifically, nobody is going to find you.
For more information about bankruptcy, contact the Law Offices of Loomis and Greene.