Bankruptcy Myths Nobody Should Believe
It is never pleasant to file for bankruptcy. You are going to go through a mix of emotions and you will receive a lot of information you had no idea about. The problem is that most people do not actually know much about bankruptcy. Because of this, the advice they offer is not actually valuable. It is always better to talk with an attorney like David M. Offen, Bankruptcy Attorney in Philadelphia, PA than to discuss things with a friend. If you trust everything you read you can end up thinking that the myths below are correct, which is not the case.
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Myth – You Are Going To Lose Everything
So many do not file for bankruptcy as they are afraid they will lose all their assets, including their home. In reality, most of your possessions will remain in your property. In most Chapter 7 cases debtors do not give up any possessions. You do not have to get rid of your flat screen TV set. Your possessions are analyzed but only some are going to actually count and will be auctioned. With Chapter 13 all assets remain in your property but their value will impact repayment plans.
Myth – All Debts Are Relieved
You will often hear that all the debts you have will be erased but in reality, exceptions do apply. Generally speaking, when filing for bankruptcy you will not be able to discharge the debts you are personally considered to be responsible for. For instance, you cannot get rid of debts caused by fraud, child support, family support or taxes. Your student loans will not be erased. However, debts can be discharged from credit cards, medical bills, personal loans and more. The bankruptcy attorney needs to analyze your situation and tell you exactly what debts are going to be affected by bankruptcy when deciding if this is a good solution in your case.
Myth – It Is Better To Pay Off Your Debts
As you file for bankruptcy you make a very serious decision. However, this does not mean it is something bad. In many situations, bankruptcy is actually the best option. For instance, in the event that you have debts that are over 50% of the annual income and there is no real way in which you could pay off your debt in around 5 years, there is a huge possibility that you need to file for bankruptcy. While there are downsides of bankruptcy, this does not mean struggling to pay off all your debts is a better choice.
Myth – You Failed At A Personal Level If You Filed For Bankruptcy
Most people associate bankruptcy with failure or character flaws. They rarely see it as a financial solution to problems that appeared. Statistics show that over 50% of bankruptcies appeared because of medical bills. Also, many happen as stagnant wages hit people hard, not because of improper financial management.
No matter why you decide that bankruptcy is the best solution for you, be sure that you see the situation as what it actually is. The reason why bankruptcy filing appeared was to help people that were faced with specific financial struggles.
Author: Andrew Simmons
