For most Americans the decision to file for bankruptcy is a last resort. Between unemployment, underemployment and uninsured medical costs, people are turning towards bankruptcy for much needed relief. Before anyone ventures down the road to bankruptcy they will need to have common bankruptcy myths exposed.
Myth: I won't qualify because I have a good job.
All filers are required to take the "means test." The means test will compare your income for a household of your size to the median income of your state. If your income is too high - you will be diverted to filing a Chapter 13 bankruptcy as opposed to a Chapter 7.
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Myth: If I file a Chapter 13 I will have to pay off all my debt.
This is not necessarily true. Every Chapter 13 repayment plan is different; they can range from paying unsecured creditors virtually nothing to paying up to 100%. It all depends on a variety of factors including your total debt load, your non-exempt assets and your disposable income.
Myth: I will lose everything that I own if I file bankruptcy.
The vast majority of bankruptcies are "no asset" cases where the debtor gets to keep everything they own. This is because the exemptions allow debtors to keep a significant amount of personal property including IRA's and pensions - which are inaccessible to the trustee and creditors.
Myth: I can include alimony and child support in bankruptcy.
You cannot include spousal support/alimony, child support, student loans, court-ordered fines or victim restitution in bankruptcy. However, most unsecured debt can be discharged through a Chapter 7 bankruptcy.
Myth: My credit will be ruined if I file bankruptcy.
Most people who file bankruptcy do so as a last resort. By the time most people file - their credit is usually already in pretty bad shape. When bankruptcy is compared to letting your debt continue to spiral out of control, you could very well have better credit after filing bankruptcy than if you never filed at all.
Myth: I will never qualify for another credit card.
Not true at all! In fact, many people start receiving credit card offers in the mail shortly after their bankruptcy is discharged. They will not have the most attractive interest rates, or the highest credit limits. If you, however, maintain a low balance and pay your payments on time you should be able to increase your credit score and receive more appealing credit card offers down the road.
There is a wealth of information available about how to improve your credit after bankruptcy. If you are contemplating filing for bankruptcy - an experienced bankruptcy attorney can provide you with priceless insight into the entire process. They can answer all of your questions relating to both bankruptcy and any alternatives available to you. They can also assist you in developing a winning strategy for rebuilding your credit and your life after bankruptcy.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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