Bankruptcy is not the dirty word that you might think it is. It’s a legal process developed to give consumers opportunities to reduce stifling debt and get a fresh start while satisfying credit requirements as much as possible. While personal bankruptcy can lift an enormous weight off your shoulders, you may be hesitant to reach out for help because you believe some of the common misconceptions. It’s time to bust the popular myths and provide personal bankruptcy facts.
Myth 1: You’re Lazy or Disorganized
Our economic landscape is set up to provide plenty of access to credit. Unfortunately, it’s easy to borrow more money than you can pay back. Bankruptcy attorneys understand this. In fact, it’s why we do what we do. We’re not here to judge. Our goal is to help you gain peace of mind. Working with a trusted attorney can help you set bankruptcy myths straight and get information that you can use.
Myth 2: The Bankruptcy Process is Tedious and Confusing
An experienced bankruptcy attorney should clearly and concisely explain the bankruptcy process for you and get those myths debunked. We take care of almost every aspect of the procedure. We’ll organize and manage the bankruptcy. The consumer simply must be available to provide necessary information about their assets and other data when required.
Myth 3: You’ll Lose Everything
You might think that one of the consequences of filing for bankruptcy is that you’ll have to give up all of your possessions. In most cases, you can keep the personal property that you need to live and work. It’s important to tell your attorney about everything you own. A trusted bankruptcy attorney can guide you in the process so that you don’t lose anything you wish to keep. Equity in vehicles and real property could mean that you need to avoid filing for Chapter 7, and instead, we might need to review your options in Chapter 13.
Myth 4: You Could Get Fired From Your Job
Contrary to some personal bankruptcy myths, it’s illegal for your employer to fire you, demote you or reduce your compensation for filing for bankruptcy. Therefore, you don’t have to worry about losing your job. However, you should know that private employers are allowed to deny you employment because you’ve filed for bankruptcy.
Myth 5: Your Credit Will Be Ruined
Bankruptcy can limit your access to credit and drive down your credit score. However, your credit score should begin to bounce back as soon as the bankruptcy is finalized, which generally takes less than a year.
Myth 6: Your Debt Will Get Completely Wiped Out
While bankruptcy can discharge most of your unsecured debt and some of your secured debt, it doesn’t eliminate the following:
- Child support
- Spousal support
- Student loan debt
- Tax debt
- Criminal fines and restituion
Learn More About How to Eliminate Debt in Bankruptcy Discharge
Myth 7: You Can’t File for Bankruptcy More Than Once
According to popular myths, you can’t file bankruptcy in the future if you go through it now. The truth is, you can file bankruptcy more than once. You can’t file Chapter 7 more than once every eight years, but you could follow a Chapter 7 with a Chapter 13 or vice versa. If you’ve had a prior case, speak with your bankruptcy attorney about whether enough time has passed that you could qualify to file again. Sometimes a prior bankruptcy can affect whether you’ll be eligible for a discharge in the new case. You can design a strategy with your attorney that will give you the best outcome.
Myth 8: You’ll Never Be Able to Buy a House
Different types of bankruptcy and loans require distinct waiting periods before you can apply for a mortgage. Government loans, such as FHA or VA loans, have more relaxed standards for applying after bankruptcy and you could still be a candidate after filing for bankruptcy. Still, you should be eligible for any type of mortgage if you’ve repaired your credit and completed the required waiting period.
Myth 9: You’ll Destroy Your Spouse’s Credit
If you’re married, you’ll have to decide whether to file for personal bankruptcy individually or jointly. Filing individually is usually preferred if you accrued the debt before you were married, and it’s only in your name. Negative marks on your credit history won’t affect your partner’s score. However, you might have trouble making large purchases together until you have rebuilt your credit. In most cases, your spouse can apply for future credit alone if they want to keep your bankruptcy history exempt from consideration. The consequences of filing bankruptcy individually shouldn’t derail your spouse’s finances.
Myth 10: You Make Too Much Money to Qualify
According to the bankruptcy means test, individuals who make enough money to pay off their debts don’t qualify for Chapter 7 bankruptcy. However, you might still qualify for a Chapter 13 bankruptcy, which will allow you to reorganize your debts and make them more affordable. The means test evaluates your income and expenses and compares them to the median income for a household of your size in your state. Your attorney can help you determine which chapter you qualify for by reviewing an average of your last six months of gross income.
Instead of digging through the internet for bankruptcy facts and myths debunked, get accurate information by contacting Flexer Law. We can help you avoid misunderstandings and confusion, giving you a straightforward plan for getting out of debt.
Middle Tennessee’s Top Bankruptcy Attorneys
Filing for bankruptcy can be daunting and stressful, but it shouldn’t be complicated. You can trust the help of our experienced attorneys to help you understand all of your options and ensure a smoother process.
Flexer Law has been serving the legal needs of Middle Tennessee residents since 1981. Our experienced bankruptcy attorneys will work diligently on your behalf to provide the best financial outcome for you.
We have three office locations throughout Middle Tennessee to accommodate your legal needs. Contact us to schedule a consultation, and we’ll find the best solution to get your financial life back on track.