You may not know anyone who has ever filed for bankruptcy. And those who have filed bankruptcy usually have only done so once. For these reasons, bankruptcy is rare in most people’s lives, and they tend to get by on conjecture and myth instead of facts and first-hand knowledge. If you are facing financial problems, bankruptcy may be the right choice for you, but you may not even consider it because of the myths you believe.
Here are the top five myths we’ve heard about filing for bankruptcy in Gilbert, along with some information to help you learn the truth so you can decide if bankruptcy is right for you:
Myth #1: It Will Solve All Your Money Problems
Many people think of bankruptcy as a clean slate. They think that if they file for bankruptcy, they will no longer owe any of the people they owe – credit card companies, the mortgage lender, the car company, the hospital, the student loan company, and even friends and family.
This is not the truth. Chapter 7 bankruptcy is what most people are thinking of when they think of the “clean slate” option, but not even Chapter 7 bankruptcy clears out all debts. Chapter 7 bankruptcy can discharge unsecured debts like credit cards and medical bills, but it cannot discharge secured debts like your mortgage or car loan. It also cannot discharge student loans, child support, and some other financial obligations.
Myth #2: You Will Lose Everything
One reason that many people hesitate to look into bankruptcy when they are in financial trouble is they believe that it will cause them to lose valuable assets like their home or their car. Fortunately, this is not always the case. If you file for Chapter 7 bankruptcy, your assets will be sold to repay your creditors. However, a certain exemption is allowed, which can help you keep your house or car if you do not have much equity built up in them.
If you file for Chapter 13 bankruptcy, you will restructure your debt under a payment plan. You will be able to keep your home and car without worrying about the exemption. Chapter 13 is a better option for those who have built up more equity in their personal property.
Myth #3: You Will Never be able to Get Credit
The second thing that usually holds people back from filing from bankruptcy is they fear they will never be able to get credit again. They think they won’t be able to get credit cards, won’t be able to buy a car, and won’t be able to buy a home. Such thoughts are devastating to many, and they carry on under the weight of debt they don’t have to carry as a result.
The reality is that you will be able to get credit after filing for bankruptcy – a lot sooner than you may think. Many credit cards will start approving you in as little as a year after your bankruptcy is completed, and you can qualify for FHA-backed home loans after just two years. The bankruptcy will be off your credit record entirely after seven years.
Myth #4: It’s the Worst Thing to Happen
Filing for bankruptcy feels like the nuclear option for many. They think that resorting to bankruptcy is the worst thing that will ever happen to them and that they will lose everything and be “ruined.” They will do everything they can to avoid filing for bankruptcy.
The truth is that bankruptcy is far from the worst thing that can happen to a person. In fact, in most cases, it is one of the best things that can happen to them. Bankruptcy can help get you out from under crushing debt so that you can start taking back control of your finances. You can reduce your stress and start doing the things you want much sooner.
Myth #5: You’re a Failure if You File for Bankruptcy
A lot of people think that if you are smart or responsible, you won’t have money problems. Many think that if you have to file for bankruptcy, it means you’re a “failure.”
Bankruptcy is a legal right. Taking advantage of this right is not something that should make you feel bad about yourself. Recognizing the benefits that bankruptcy offers and using it to your advantage is one of the smartest things you can do. That makes you a success, not a failure.
Do not let misinformation and prejudice keep you from filing from bankruptcy to get the debt relief you need. Bankruptcy is a powerful tool, and when used properly, it can change your life for the better. Talk to an experienced bankruptcy attorney in Gilbert about how bankruptcy may benefit you. An attorney can answer all your questions and dispel any other myths you might have.
Gilbert Bankruptcy Lawyers can help if you are thinking of filing for bankruptcy in Gilbert. We’ll answer all your questions, and go over your financial circumstances to help you understand how bankruptcy might impact you specifically. There is no obligation to move forward, so it is worth setting up the meeting so that you have the information to make an informed decision. Call us in Gilbert today to talk with a bankruptcy attorney about your options.
Gilbert Bankruptcy Lawyers