5 Myths About Bankruptcy

There are many myths surrounding the bankruptcy process. For people with mounting debt and few options to get out from under the pressure of relentless creditors and debt collectors and are in desperate need of a solution, how do you know what is true and what is a myth? There are a lot of rumored inaccuracies regarding bankruptcy that tend to discourage individuals who could benefit from filing. To make educated financial decisions, you must be able to separate the truths from the myths in the legal process. Here are the top 5 myths about bankruptcy:


1.  You Will Lose Everything

Most people believe that if you file for bankruptcy the creditors will take everything. Fortunately, this is not the case for most people. A majority of people who file are able to keep their home, car or other personal property that is fully exempt. To find out if your property is exempt, discuss your case with an experienced attorney.


2.  My Credit Will Be Ruined

A common misconception is that your credit will be ruined and you will not see any improvements on your credit score until 10 years after filing. While your filing does remain on your credit file for ten years, many debtors have reported credit score improvements as early as 2 years after their filing.


3.  I Won’t Qualify for a Mortgage

Many people mistakenly believe that if they file for bankruptcy they will never qualify for a mortgage loan.  In fact, getting a mortgage loan after your case is filed is quite possible.  You can qualify for a home loan in as little to 2-3 years after your filing, assuming you maintain good credit after you file. To get a mortgage loan, you must prove credit worthiness, provide an explanation for your filing and show good post-bankruptcy credit habits.


4.  You Can Only File Once

So how many times can you file?  Most people are surprised to learn that bankruptcy actually does not place a limit on the number of times that you can file.  Instead, it places a limit on the number of times that you can file and obtain a discharge of your debts.  You can obtain a Chapter 7 discharge once every 8 years. If your prior case was a Chapter 13, then you file and obtain a discharge sooner than 8 years.  If your second case is a Chapter 13 filing, you can file and obtain a discharge even sooner.   If you have previously filed a bankruptcy, you should talk to an experience bankruptcy attorney to discuss whether you can file again at this time.


5.  It Is Morally Wrong

Most individuals who file for bankruptcy do so after a fateful event occurs in their life such as a divorce, the death of a spouse, a medical emergency or the loss of a job. These situations are beyond their control and they file as part of an important step in regaining control over their finances. In fact, bankruptcy is your constitutional right.  It was written into  the constitution by our founding fathers who realized that bad things happen to good people and that despite the best of intentions you may get yourself into a situation in which you need serious debt relief.


If you are in a financial bind and considering bankruptcy as a solution call an expert lawyer today for a free debt relief consultation.  Take the first step to get out of debt San Diego and start enjoying relief from the mounting pressures of creditors.