Even though hundreds of thousands of Americans file for bankruptcy every year, the bankruptcy process remains a mystery to most people. Most people know very little about bankruptcy and are surprised that what they thought they knew was actually the stuff of myth and not of fact. There is a lot of misinformation out there about what it means to file bankruptcy and what bankruptcy involves.
Here are some of the biggest myths about bankruptcy that need to be debunked once and for all:
Myth 1. Bankruptcy has been done away with. You can’t file anymore.
While there were major changes to the Bankruptcy Code in 2005, the option to file bankruptcy is still available for those who are unable to repay debts. An experienced bankruptcy attorney can explain the eligibility requirements and help you decide if you can file.
Myth 2. Only unemployed people can file for bankruptcy.
This is absolutely not true. If you have income from employment over a certain level, you may only be able to apply for Chapter 13 bankruptcy, but there are options available for both unemployed and employed people under the current laws.
Myth 3. Medical bills can’t be wiped clean with a bankruptcy.
Nearly any debt that isn’t secured with collateral, such as medical bills and credit card debt, can be discharged as a part of a bankruptcy.
Myth 4. You have to pay back debts in Chapter 13 in full.
With a Chapter 13 Bankruptcy, you’re required to pay back a percentage of what you owe based on your disposable income. In some cases, you may not have to repay anything, while in others you may have to repay some or all of the funds.
Myth 5. If you file for bankruptcy, you can’t get credit for 10 years.
This just isn’t true. Many people in Chapter 13 are able to continue to get loans while they’re still in bankruptcy, and individuals who are in Chapter 7 often get credit card offers very soon after discharging. While interest rates are often higher soon after a bankruptcy, most people are able to get credit.
Myth 6. Everything you own is taken from you and sold when you file for bankruptcy.
The majority of bankruptcy cases are settled without any assets being claimed at all. It’s rare for people not to keep everything that they own.
Myth 7. You have to owe a lot to file for bankruptcy.
There is no minimum amount of debt that you must have to be eligible to file for bankruptcy; however, if you only have a small amount of debt, there may be other options available for you to consider. A reputable bankruptcy attorney will be able to explain these other options to you.
Now you know a little more about the truth behind bankruptcy. If you’d like to learn even more and find out if bankruptcy is the right way for you to get a fresh start, contact Robert A. Boyd, a Willoughby, Ohio, bankruptcy attorney and debt relief agency with more than 25 years of experience. Call 440-230-3230 to set up a free consultation.