Making the decision to file for chapter 7 bankruptcy can be a daunting challenge. The misconceptions surrounding bankruptcy and how it can affect your life are numerous, which makes things even harder. People have different opinions when it comes to chapter 7 bankruptcy. Sometimes, even the internet gets it wrong. In this article, we dispel some of the top misconceptions about bankruptcy.
Filing Bankruptcy Is an Indication That You’re A Financial Failure
The misconception that people who file chapter 7 bankruptcy are failures is perhaps the worst out there. As any bankruptcy attorney will tell you, a majority of bankruptcies are as a result of issues that are outside the control of people who file them. These issues include medical debts, divorce, and the loss of employment. Very few people file bankruptcy because they mismanaged money in their businesses. In fact, 97 percent of all chapter 7 bankruptcies and 99 percent of chapter 13 bankruptcies are nonbusiness filings.
Filing Bankruptcy Means You’ll Lose Everything
Think that you’re going to lose your kids’ toys or 10-year-old oven if you file bankruptcy? Nothing could be further from the truth. Whether you’re a couple or an individual, you’re going to be allowed to keep certain items. Such items are referred to as exemptions. Your bankruptcy lawyer should be able to tell you what you can expect to keep. In most states, people who file bankruptcy can exempt their household goods, retirement savings, at least one car, and so on.
You’ll Never Get Credit Again If You File Chapter 7 Bankruptcy
This misconception is quite rampant. In truth, you’ll start to receive credit offers from lenders within a short time after you emerge from bankruptcy. Why? Because lenders begin to consider you a better credit risk since you’ve discharged many of your obligations and aren’t likely to file bankruptcy anytime soon. Of course, you’ll have to pay more interest in the early years after emerging from bankruptcy, but you’ll be able to re-establish your good credit sooner, so it’s all well worth it.
Filing Bankruptcy Will Make You Lose Your Job
There are anti-discrimination provisions in the bankruptcy laws that apply to both private employers and the government, so you don’t need to worry that you’ll lose your job solely for filing bankruptcy. Many organizations take bankruptcy into consideration only if you’re going to be handling huge sums of money. That said, filing chapter 7 bankruptcy can work in your favor as it indicates that you’re proactively working to resolve your financial woes, especially if you’re working with a reputable debt negotiation attorney.
Filing Bankruptcy Is Expensive
Filing bankruptcy is making an investment. Sure, you may need to pay thousands of dollars if you hire competent bankruptcy attorneys, but you’re potentially eliminating millions more in debt. Additionally, you’re averting a lot of the fear, frustration, stress, worry, and the money you’ll need to spend in the coming years if you act right away. That’s why talking with a chapter 7 bankruptcy attorney is a great idea so you can know your options.
You’re Better Off Paying Your Debts
Many people opt to start paying off their debts instead of filing chapter 7 bankruptcy. This, however, is not the best idea. First of all, clearing your debts can take you years. With a bankruptcy case, on the other hand, you may be able to eliminate your debts in just a few months and start to rehabilitate your credit in two years. In some cases, it’s simply impossible to pay off your debts because the debt is simply too big. In some cases, you may be facing a repossession or a foreclosure and don’t have immediate resources or time to handle the debt.
Filing for Chapter 7 bankruptcy is neither simple nor pleasant. There are lots of hoops that you need to jump through as you seek this debt relief option, and it’s easy to get tangled up in them. One of the best ways to make the bankruptcy process smoother is by separating facts regarding bankruptcy from the myths. Contact the Law Office of Larry Karandreas for professional bankruptcy lawyers in Phoenix today.