When researching legal advice there are many bankruptcy myths you will come across. Here are the most common misconceptions regarding bankruptcy.
Myth 1: Only Irresponsible People File for Bankruptcy.
FALSE. There are all sort of reasons ordinary hard working Americans consider bankruptcy as an option. Divorce, downturn in the economy, loss of job, illness, business failure due to market changes, are a few all too common reasons why ordinary people need to file for bankruptcy. Remember, bankruptcy law is designed by congress to help people in need of protection against their creditors. Doing nothing may be more irresponsible for you and your family.
Myth 2: I Can’t Get Credit for 10 Years.
FALSE. You can start rebuilding your credit as soon as your case is discharged. It is true that bankruptcy stays on your credit for about 7 to 10 years, but that does not mean you can’t borrow any money. You rebuild your credit out of bankruptcy the same way as you build credit if you don’t file for bankruptcy. You have to borrow money (something I don’t recommend) and then you have to pay it back on time. Generally, the more you do this, the higher your credit score.
Myth 3: If You File Bankruptcy, You Will Lose Everything You Own.
FALSE. Typically, the opposite is true. If you don’t file for bankruptcy, creditors will be able to garnish your wages and bank accounts, lien and/or foreclose on your property etc... With the help and guidance of a good bankruptcy attorney, you can prevent the loss of your assets and discharge your debts.
Myth 4: With the new Bankruptcy law, bankruptcy has become useless.
FALSE. The “New Bankruptcy Law” passed in 2005, changed many aspects of the bankruptcy code, but bankruptcy protection is alive and well for most Americans. Many aspects of the bankruptcy have remained the same, and the changes don’t impact everyone. Obviously, this is a complicated a question, but you should know that a competent bankruptcy attorney can use the new law to your benefit.
Myth 5: Everyone is going to know that I have filed for bankruptcy.
FALSE. People have to go and look in the right location to find out that you have filed for bankruptcy. After all, it is part of public records. It is possible to find out about your bankruptcy filing, if one has access to the bankruptcy court system, or hires some who has such access.
Hopefully you've learned which bankruptcy myths to avoid. If you would like to speak with a attorney please give us a call.