If you’re considering bankruptcy as a solution to your financial struggles, you may have heard a lot of myths and misconceptions about the process. It’s important to get all the facts straight before making any decisions, so I’m here to bust some of the top myths about bankruptcy.
Myth #1: Bankruptcy will ruin your credit forever.
This is perhaps the most common myth about bankruptcy. While it’s true that bankruptcy will have a negative impact on your credit score, it’s not necessarily a permanent one. In fact, many people see their credit scores start to improve once their bankruptcy is over. This is because bankruptcy gives you a fresh start and helps you get out of debt, which can ultimately lead to better credit habits in the long run.
Myth #2: You’ll lose all of your assets.
Another common myth is that bankruptcy means you’ll lose everything you own, including your house and car. However, this is not necessarily the case. In fact, you may be able to keep some or all of your assets. For example, Chapter 7 bankruptcy allows you to keep certain exemptions, such as your primary residence, car, and personal belongings. In over 90% of all Chapter 7 bankruptcies, the debtors get to keep all of their property, including their house and cars.
Myth #3: You’ll never be able to get credit again.
While bankruptcy can make it more difficult to get credit in the short term, it’s not impossible. In fact, many people are able to get approved for credit cards or loans as soon as their case closes. The key is to start rebuilding your credit by making all of your payments on time and using credit responsibly. If you keep a car or house with payments, you’re already well on your way to re-establishing your positive credit history.
Myth #4: Bankruptcy is only for people who are irresponsible with money.
This is simply not true. People file for bankruptcy for a variety of reasons, including unexpected medical expenses, job loss, divorce, or just simply taking on more debt than they can handle. It’s important to remember that bankruptcy is a tool designed to help people get out of debt and get a fresh start, not a punishment for being irresponsible.
Myth #5: You can only file for bankruptcy once.
This is another common misconception. While it’s true that bankruptcy should be a last resort, there’s nothing stopping you from filing for bankruptcy again in the future if you find yourself in financial trouble. However, it’s important to note that there are certain time limits in place for how often you can file for bankruptcy, so it’s best to consult with a bankruptcy attorney before making any decisions.
Myth #6: You can’t buy a house after a bankruptcy.
This is a very common misconception, and it’s simply not true. In fact, FHA guidelines provide that 2 years after the conclusion of your case, you can obtain a new FHA loan for a home. And in some cases, the wait is just 1 year. Plus, you’ll be in a much better position to afford the down payment and payments after your bankruptcy.
I hope this helps clear up some of the myths about bankruptcy.
If you find yourself struggling financially, please contact us today. We’re here to help you get a fresh start!