From our experience, we know that people file for bankruptcy for a number of reasons. Unemployment, death of a spouse, a costly illness or a divorce all may lead people to decide that bankruptcy is their best course of action.
There are a number of fallacies that people have about filing for Chapter 13 and Chapter 7 bankruptcy. Here are a few of the more popular ones
Fallacy #1: You Will Lose Your Home and Other Assets If You File For Bankruptcy
There are many exemptions in the bankruptcy code which may allow filers to retain assets while discharging their debts. In most cases, our clients retain all of their assets. Of course, that may vary depending upon your circumstances.
Fallacy #2: You May Lose Your Job for Filing for Bankruptcy
Both private and public employers are legally prohibited from discriminating against their employees as well as job interviewees because of filing bankruptcy.
Fallacy #3: Bankruptcy Will Prevent You from Getting Credit
Initially, it is hard to obtain credit after being discharged in bankruptcy. But it is possible. One option is to apply for a secured credit card, in which you deposit funds with a bank or other issuer, and then the funds or some multiple of the account balance can be borrowed and repaid. Also, it is critical to pay all of your bills on time. Further, a mortgage lender cannot discriminate against a loan applicant because of a bankruptcy filing after two years have elapsed from the date that the discharge was issued.
Fallacy #4: Bankruptcy Will Wipe Out All of Your Debts
Most of your debts will be eliminated after bankruptcy. However, there are debts that are not erased in a Chapter 7 or Chapter 13 bankruptcy. Even after discharge, you will still be required to pay recent federal and state taxes, student loans and child support and alimony.
If you have any other questions or concerns, please contact us by phone or email.