Bankruptcy: Get The Truth
Knowing whether or not to file for bankruptcy is never easy, and this difficult decision is made even harder by the common misconceptions surrounding bankruptcy. There are several bankruptcy myths that may make you want to steer clear of filing, but before you make a decision based on something you’ve heard, it is important to realize that many of these myths are untrue.
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Your credit score will never recover. This is one of the biggest myths about bankruptcy. Many people believe that your credit score will never improve after filing for bankruptcy, but this simply is not true. While it is true that a bankruptcy knocks points of your credit score, it can still be rebuilt. Obtaining a secured credit card shortly after your debts have been discharged and making your payments on time every month is a good way to start rebuilding fairly quickly.
Only people who are financially irresponsible file for bankruptcy. This is another misconception that simply is not true. While there are some people who get themselves into serious financial trouble by being irresponsible, the majority of people filing for bankruptcy have experienced serious life-changing events such as losing a job, going through a divorce or suffering a major illness or injury.
You need to have a minimum amount of debt in order to qualify for bankruptcy. There is no magical amount of debt you need to have in order to qualify for bankruptcy. What matters is whether or not you can afford to pay off your debts with your current income. If the amount of debt you have is overwhelming and more than what you can afford to pay, bankruptcy may be a good solution, even if your debt is only a few thousand dollars.
You lose everything when filing for bankruptcy. Though the laws vary from state to state, every state has laws that allow debtors to keep necessities, such as a home. There are also other exemptions allowed by law. In addition, if you file for Chapter 13 bankruptcy, you will be able to keep any property as long as you pay the value of it in your repayment plan.
Bankruptcy does not get rid of most debts. In most cases, debt is dischargeable. Unsecured debt is almost always dischargeable. This includes credit cards, unsecured loans and medical bills. Many secured debts are also dischargeable, but you will need to continue to pay or make a lump sum payment for the value of the item in order to keep it. The only things that typically cannot be discharged are domestic support payments, certain types of taxes and student loans.
Bankruptcy is designed to provide relief to people who are overwhelmed by financial obligations. It is not a punishment, and filing does not make you a bad or irresponsible person. If you are in need of financial relief and considering bankruptcy, contact a Denver bankruptcy attorney to schedule a consultation by calling 303-741-2354.