Most people have a negative association with the word bankruptcy. However, often what you heard is misleading and misinformed statements from people who are not well versed in bankruptcy law. Many very successful people and businesses have filed bankruptcy and have gone on to become very prosperous.
Bankruptcy Will Ruin My Credit
Generally, if you’re in a deteriorating financial situation where you are months behind on payments, facing civil lawsuits, and defaulted on payments then your credit has likely already been negatively impacted. Although bankruptcy may remain on your credit report for 5-10 years, you can begin rebuilding your credit immediately. Additionally, you may appear more credit “worthy” to lenders as they know that by filing bankruptcy you have eliminated a majority or all of your debt. Continuing to make on-time monthly payments on any accounts you retain in the bankruptcy will begin the process of re-building and restoring your credit.
If I File Bankruptcy I Will Lose Everything
Most Chapter 7 bankruptcy cases are what are considered “no-asset” cases, meaning everything you own falls within the exemption statues and therefore there are no assets in the bankruptcy estate. Thus, there is no property for the trustee to liquidate and creditors receive nothing. Debtors have a host of exemptions that allow them to keep, up to a certain dollar figure, household goods and furnishings, cash on hand, 401(k) and pension plans, an automobile, and tools of trade.
You Must Have A Certain Amount of Debt To File For Bankruptcy
False, there is not a minimum amount of debt that you must have to file for bankruptcy.
Bankruptcy Is an Admission of Failure
Most people who are considering filing for bankruptcy have exhausted all other options and are at a point where they are feeling hopeless and overwhelmed with an insurmountable amount of debt. In today’s economic environment, many people who have never missed a payment on a debt in their life are faced with the tough economic climate as a result of job loss, divorce, or medical illness, accidents, or other situations beyond the debtor’s control. The U.S. Bankruptcy Laws are there to provide a fresh start and help those who have no foreseeable way to overcome their debt.