Don’t let misinformation keep you from enjoying the benefits of bankruptcy.
If you’re struggling with ballooning debts, you really should take the time to explore all your options for getting your finances back on track. This includes bankruptcy! All too often, people are reluctant to consider bankruptcy due to misinformation about what it is and what it does. The best way to get accurate information about your bankruptcy options is to contact a bankruptcy attorney, but in the meantime we can start by debunking these top 10 bankruptcy myths.
1. Bankruptcy will ruin your credit. By the time your debts get so bad you’re considering bankruptcy, chances are your credit is already quite bad. Bankruptcy can actual set a strong foundation for rebuilding your damaged credit faster than you’d think.
2. Bankruptcy is for immoral people. While the desire to faithfully repay all your debts is a good thing, it is not immoral to take advantage of a legal provision that will provide you with debt relief.
3. You should pay off your car loan before filing. Actually, you can usually keep your car during a bankruptcy proceeding, and the bank lien on it will keep it from being seized by the bankruptcy trustee.
4. You should use up all your retirement savings first. Retirement savings are exempt from bankruptcy, provided they are in the proper kinds of retirement accounts. You do not want to empty these accounts in advance of a bankruptcy.
5. You should pay some of your debts in full before filing. Sometimes people have borrowed money from family or friends and want to make sure those individuals get paid before the bankruptcy goes through. Unless you pay off such debts at least a year in advance, the bankruptcy trustee can take the money back from those lenders and redistribute it as he or she sees fit.
6. You can hide assets by putting them in someone else’s name. Again, if the bankruptcy trustee figures out that you’ve done this, they can seize the assets. Plus, they may be able to convince the court to deny you a discharge because you have been dishonest about your assets.
7. Bankruptcy won’t protect you from debt collectors. Actually, getting a bankruptcy attorney will automatically force your debt collectors to stop contacting you and contact your attorney instead. Plus, many of the unsecured debts the collectors are concerned about will likely get discharged in your bankruptcy.
8. You have to wait 7 years between filings. Actually, the time you have to wait between filings depends on a number of factors but should not ever be as long as 7 years.
9. Debt consolidation is better than bankruptcy. In many cases, debt consolidation does not actually reduce the debt burden enough to help the consumer. Bankruptcy provides better and faster relief because many debts are completely discharged in the process.
10. Bankruptcy should be a last resort. Don’t wait until you’ve spent your last dollar to consider bankruptcy. Filing as soon as you realize you’re trouble can put you in a much better place long term.
