If you're considering bankruptcy as a way to gain a fresh financial start, it's important to separate fact from fiction. You may have heard rumors about how the process works. You may have even talked to a friend or family member who filed for Chapter 7 or Chapter 13 bankruptcy. However, myths abound in this area of law, and you need to know the truth.
Here are four of the most common myths you may hear:
Myth #1: You will lose all your money and possessions.
This isn't true. Cornell University Law School's Legal Information Institute points out that the law provides certain exemptions. This means that you will be able to keep a certain amount of your assets and possessions, regardless of which type of bankruptcy you file. For instance, your Individual Retirement Account (IRA) is exempt and can't be claimed by creditors. This is only one of many types of assets that you can keep. Most people are able to retain their homes, cars and various personal belongings as well.
Myth #2: Bankruptcy will ruin your credit score forever.
Surprisingly, bankruptcy can actually help you rebuild your credit. Once you file a bankruptcy petition, your creditors won't be able to continue reporting you for late payments. Then, you will be able to begin anew. Many people find that they are able to obtain prepaid credit cards and other types of credit within a relatively short time of filing.
Myth #3: You'll have to appear before a judge in a formal courtroom setting.
Having to appear before a judge is very rare. In most cases, people only have to attend a one-time meeting of creditors. This is a short, fairly informal meeting that only requires you to answer a few questions from a bankruptcy trustee. Your lawyer can also attend the meeting with you.
Myth #4: Filing bankruptcy is complex and confusing.
This isn't true if you have an attorney on your side. Working with a professional means that you won't have to worry about the paperwork, the deadlines and the other requirements. You provide the basic information upfront, and then you can relax and begin enjoying freedom from creditor harassment.
To get answers to your frequently asked questions about bankruptcy, consider talking to an experienced lawyer today.