Common Myths About Filing For Bankruptcy

Learn the facts:

Myth: You won’t be able to borrow money for at least ten years following a bankruptcy.

Truth: You can rebuild your credit score immediately. Some ways to rebuild your credit include taking out secured loans and credit cards, and making your payments on time. Many lenders consider you to be a better risk after a bankruptcy.

Myth: You will lose your house to foreclosure and your car will be repossessed.

Truth: Property exemption is common in bankruptcy filings. You can exempt your mortgage, car loan, and any other debt for property. In short, you can keep your home and car, as long as you continue to pay the bills.

Myth: You will never get a mortgage approved so you can move out of your apartment.

Truth: Nobody’s credit history is perfect, and lending institutions approve mortgages for people who have filed bankruptcy every day – often within the first year after filing.

Myth: Bankruptcy is a form of theft and cheating the system.

Truth: America was founded on the very belief in fresh starts. Most people have repaid their original credited amount by the time they decide they can’t keep up with excessive interest payments and late fees.

Myth: I will lose my car if I file for bankruptcy.

Truth: Under the federal exemptions, $3,225 of the value of your motor vehicle is exempt. Further, if you file under Chapter 13, with a few rare exceptions, you can choose whether or not you want to keep your vehicle. You need to consult an attorney to find out what will happen to your vehicle if you file for bankruptcy.

Myth: My employer will fire me for if I file for bankruptcy.

Truth: Federal law prohibits both public and private employers from discriminating against employees solely on the basis of filing a petition for bankruptcy.

Myth: My credit will be ruined for the rest of my life if I file for Bankruptcy.

Truth: You will have opportunities to re-build your credit after filing bankruptcy. Creditors may charge a premium for the credit that is extended to you, however, if you follow a well organized plan, eventually with a history of consistent post-bankruptcy payments, you will be able to increase your credit rating.