Adam Law Group Blog

Understanding Common Myths About Bankruptcy

 

To many people, the prospect of filing for bankruptcy can be overwhelming. Those people often end up filing for bankruptcy only because the fear of increased debt and continued creditor harassment is even worse. In reality, bankruptcy can be a helpful process and not nearly as scary as it seems. The following are some of the other common myths and concerns that people have about the bankruptcy process.

Myth 1: A Person Loses Everything in Bankruptcy

Many people are afraid to file for bankruptcy because they fear that they will end up losing everything that they own. While it is true that bankruptcy law frequently results in individuals losing some of their belongings, there are certain exempted assets that a person is allowed to keep even through a bankruptcy filing.

Myth 2: A Person Will Never be Able to Rebuild Credit

Contrary to what some people believe, anyone can rebuild their credit after bankruptcy. After a person’s unsecured is discharged, his or her debt-to-income ratio is much more lucrative to potential lenders. While the bankruptcy process can affect a person’s credit score in the short run, many people discover that their credit score improves dramatically in as little as one year.

Myth 3: Bankruptcy is Only a One Time Process

Bankruptcy law has regulations concerning how much time is required to pass before an individual is able to file for bankruptcy again. An individual, however, is not prohibited from filing for bankruptcy more than once. Instead, a period of eight years must pass between filing for Chapter 7 bankruptcy and a period of two years must pass before filing for Chapter 13 bankruptcy. To truly benefit from the bankruptcy process, however, it is best to understand the reasons why you filed for bankruptcy and to avoid making the same mistakes again in the future.

Myth 4: Everyone Will Learn You Filed for Bankruptcy

A surprising number of bankruptcy filings occur each year. While bankruptcy documents are a part of the public record, this does not mean that most or even anyone who knows you will be aware that you filed for bankruptcy. Instead, the only people who will know you filed for bankruptcy are likely your lawyer, creditors, and court officials. Even if someone happens to find out that you filed for bankruptcy, there is no need to feel ashamed. Many people have good reasons file for bankruptcy each year due to extenuating circumstances.

Speak with an Experienced Bankruptcy Lawyer

The decision to pursue bankruptcy is a serious one, but it has the potential to greatly improve a person’s financial situation and offers the opportunity at a new start. Bankruptcy law helps consumers facing insurmountable financial difficulties that can not be addressed by any other method. Contact the Adam Law Group today to schedule an initial appointment with an experienced bankruptcy attorney.