Five Myths About Bankruptcy And The Truth Behind Them
Bankruptcy may be your only viable option when you’ve failed in all your attempts to repay your outstanding debts. Bankruptcy can be defined as a federal court procedure that helps you to either repay or get rid of debts under the supervision of the bankruptcy court. However, there are certain misconceptions about bankruptcy.
This article deals with the myths and the truth about bankruptcy.
Five Myths About Bankruptcy:
- Myth: Everyone will know that you’ve filed bankruptcy.
- Truth: No one will come to know that you’ve filed a bankruptcy unless you’re a famous person, whose financial information is picked up by media. Your creditors will only come to know that you’ve filed a bankruptcy.
- Myth: Both spouses need to file for bankruptcy together.
- Truth: Both the spouses don’t have to file a bankruptcy together unless they want to discharge a debt that both of them are liable for. This is because when both of you are liable for a debt and anyone files a bankruptcy, then the creditor demands payment from the other spouse who hasn’t filed it.
- Myth: You can get rid of all debts if you file a bankruptcy under Chapter 7.
- Truth: Even if you file Chapter 7 bankruptcy, you’ll not get discharge from certain debts, such as, student loan debts, child support and alimony along with the debts incurred as a result of a fraudulent act. Bankruptcy court will also not discharge any legal settlements that you need to pay because of any lawsuits taken against you.
- Myth: You can file for bankruptcy as many times as you want.
- Truth: There are some limitations on bankruptcy filing. You’ll not be able to file a new Chapter 7 bankruptcy if you’ve already filed one within 8 years and Chapter 13 within 6 years of time. Similarly, you’ll not be able to file a Chapter 13 bankruptcy within 2 years from a previous filing and 4 years from the previous Chapter 7 filing.
- Myth: A bankruptcy will continue affecting your credit report forever.
- Truth: Bankruptcy remains on your credit report for 7 years if you file Chapter 13 and 10 years if you file Chapter 7. Though it’ll be difficult for you to get credit for 2 years after you file a bankruptcy, yet the effect of it will start diminishing from the day your case is dismissed or discharged.
It is quite important that you clear your doubts about bankruptcy before you file one. Therefore, you should contact a bankruptcy attorney when you decide to file a bankruptcy. He or she can stop harassing creditor calls and also give you protection from uncertainty, which will save you from anxiety. Moreover, a bankruptcy attorney will also suggest which chapter of bankruptcy will be most suitable for you.
