Common Misconceptions About Bankruptcy, Explained
Choosing to file for bankruptcy is no easy decision. There are many myths about this major financial decision that can hinder you, and it can be hard to realize what exactly you are getting yourself into. In order to prevent any miscommunications during the bankruptcy process, here are some common bankruptcy myths that you should learn about.
Myth: Filing for bankruptcy means that you will be relieved of all debts immediately.
There are different kinds of bankruptcy you can file, with the most common being Chapter 13 and Chapter 7. Both of these processes have different regulations, and exemptions differ on a state by state basis. However, neither one will instantaneously get you out of debt and back into good financial standing.
Myth: I will lose all of my possessions when I file.
Just hearing the words bankruptcy may cause chills to go up your spine, because you may think you will lose all of your assets and possessions. This is untrue; in the majority of cases you are allowed to keep your the majority of what you own. While each case is different, most people who file Chapter 7 cases do not give up any belongings, and under Chapter 13 you keep all of your assets but the value of them is re-figured into your repayment plan.
Myth: Filing for a bankruptcy lawsuit is free.
Anyone who files for bankruptcy must pay a filing fee. Typically the fee for a Chapter 7 case is $355, and it is $310 for a Chapter 13 case.
Myth: Bankruptcy is the same as paying off your debts.
Without a doubt, filing for bankruptcy is a serious financial decision and the decision to file should not be taken lightly. If you are even considering filing, you should make an appointment to speak with a bankruptcy lawyer over the pros and cons of starting a bankruptcy lawsuit. They will be able to assess your personal situation, and give you advice on how to go from there. Who knows, you may be able to pay off your debts in a timely manner rather than having to undergo the bankruptcy process.
Myth: Filing for bankruptcy symbolizes personal failure.
This is absolutely untrue! In fact, most bankruptcies are filed due to debt incurred from high medical bills, student loans, and outstanding mortgage payments, rather than poor financial management. Remember that you will be filing a bankruptcy lawsuit in order to get your finances back on track, and that the pros outweigh the cons.
Have any questions about filing for bankruptcy? Contact our bankruptcy attorneys today.