Common Misconceptions About Bankruptcy

Common Misconceptions About Bankruptcy

If you read our recent blog on why people declare bankruptcy you would know that people file for bankruptcy for a number of reasons. Whether it’s a result of a job loss, divorce or medical expense, there are a number of individuals who find that declaring bankruptcy is their best option.

There are a number of misconceptions that people have about filing for Chapter 7 and/or Chapter 13 bankruptcy. Below is a list of some of the top myths concerning bankruptcy.

Misconception 1: You Will Be Fired for Filing for Bankruptcy

Both private and public employers are prohibited from discriminating against employees or potential employees because of bankruptcy.

Misconception 2: Bankruptcy Will Result in Losing Your Home or Other Assets

The bankruptcy code is generous in the assets it lets you keep while clearing debts. In the vast majority of bankruptcy filings, our clients keep everything.

Misconception 3: Bankruptcy will Clear All of Your Debts

The majority of your debts will be eliminated after bankruptcy. There are debts that are not erased in a Chapter 7 or Chapter 13 bankruptcy. You will still be required to pay recent federal and state taxes, student loans and child support or alimony.

Misconception 4: Bankruptcy will Prevent You from Getting Credit

In the short run, it is difficult to obtain credit following bankruptcy. It is not impossible. The key to finding credit is being persistent. Your best bet will be to rebuild your credit with a secured credit card. Stay current on post – bankruptcy obligations such as car loans, mortgages and utility bills. Secured cards require consumers to put down a deposit that’s typically equal to the credit line, so if you put down a $500 deposit, you’d likely have access to $500 of credit.

Hopefully the above cleared up any misconceptions that you had about bankruptcy. There is life after bankruptcy and it starts here. Contact Tom Orr at 609-386-8700 today.