BANKRUPTCY ASSISTANCE

Myths About Claiming Bankruptcy

Claiming bankruptcy is something many people try to avoid.  While it should be a last resort for financial troubles, claiming bankruptcy can be a solution to extreme debt problems. 

There are a lot of myths about claiming bankruptcy.  Many of these myths come from people simply not understanding the process of bankruptcy.  Most myths are not true at all.  Here are some of the top myths out there about claiming bankruptcy.

All Debts Are Wiped Out When Claiming Bankruptcy

The debts that can be wiped out through claming bankruptcy are actually limited.  Some debts, such as fines or money owed to the government or a governmental agency, some student loans and child support obligations are all examples of debt that can not be erased through bankruptcy or through any other means.

Additionally, the only debts that can even be considered to be wiped out through claiming bankruptcy are those you list on your bankruptcy filing papers.  If you fail to list a debt then it will not be erased.

Claiming Bankruptcy Means You Lose Everything You Own

You will never lose everything when you file for bankruptcy.  You have the option of claiming exemptions.  You can choose to take the exemptions offered by your state or by the federal government that make certain property you own exempt from liquidation under your bankruptcy.

Usually you are allowed to claim your home, a vehicle and personal property.  You may lose some possessions through the process depending on the type of bankruptcy you file and the value of your assets.

It Is Impossible To Rebuild Credit After Claiming Bankruptcy

Claiming bankruptcy does damage your credit.  The fact that you claimed bankruptcy will be reported on your credit report and it will bring down your credit score.  However, there are plenty of ways you can rebuild your credit after claiming bankruptcy. You will not suffer from a bad credit score forever.

Claming Bankruptcy Means I Can Rack Up Huge Debts and Not Have To Pay For Them

The new bankruptcy laws make filing bankruptcy a little more difficult.  Getting all your debts wiped away is more difficult and most often you will end up doing a repayment instead of having debts cleared.  You do not want to use bankruptcy as a way to get rid of debt just because you do not want to pay for it.  In fact, that is one of the main reasons the laws were changed in the first place.