It’s never easy to find yourself thinking about bankruptcy, as this means your finances are in bad shape. However, if it’s the best way to regain financial control, it’s an idea you absolutely need to consider.
There are many bankruptcy myths that can affect the decisions you make, so you need to beware of these at every turn of the road.
- You will lose everything in bankruptcy. Many people believe that bankruptcy can give them a fresh start, but not until they lose everything. You may lose some assets as a result of your filing, but some property is exempt.
- Bankruptcy will relieve you of all your debts. While you can wipe clear many types of debt with bankruptcy, this doesn’t hold true across the board. For example, bankruptcy doesn’t have any impact on student loan debt, alimony payments or child support.
- Filing for bankruptcy means you don’t know how to manage your finances. Although you may have made some poor decisions, remember this: Bankruptcy is often the result of something that is out of your control. For example, losing your job or becoming ill with a serious disease can both result in financial problems.
- Filing for bankruptcy will doom you in the future. Yes, a bankruptcy filing will make it more difficult to secure a loan in the future. Subsequently, buying a car or home may be a challenge. While true, you can get your finances back on track. For example, using a secured credit card allows you to slowly rebuild your credit.
If you believe these myths to be true, you may find yourself shying away from bankruptcy when it’s actually just what you need.
If there’s reason to believe filing for bankruptcy can improve your financial situation, focus on the pros and cons of both Chapter 7 and Chapter 13. The information you collect allows you to better understand your situation and what will happen if you proceed.
It’s a big decision that will impact your life in many ways, but as long as it’s rooted in facts, not myths, you should be able to move forward with confidence. Soon enough, you’ll realize that you’re on track to improving your life in many ways.