Bankruptcy provides individuals facing insurmountable debt and financial
uncertainty with the legal pathways they need to address their debt issues
and pursue a brighter financial future. Because it is a legal process,
however, bankruptcy can seem like a daunting, complex, and confusing endeavor.
Unfortunately, this confusion and lack of familiarity with the process
can lead to consumers getting their hands on the wrong types of information.
At The Bankruptcy Law Group LLC, our team has helped many men, women, and
families throughout Georgia when they felt there was little hope in site.
Often, we receive calls from clients and potential clients whose concerns
and questions about bankruptcy are skewed by incorrect information they
receive in the form of myths and misconceptions.
Backed by years of combined legal and financial experience, our team knows
that having the correct information is vital to making informed decisions,
which is why we always work closely with clients to directly address their
concerns, questions, and any myths they may have been led to believe are
true. Over the years, we have heard a number of myths about
bankruptcy and its impact on consumers, including some of the most common:
If you file bankruptcy, you won’t be able to get credit.
This myth could not be further from the truth, and it can potentially scare
consumers aware from pursuing debt relief options that will enable them
to build better credit than they ever had. While it is true that filing
for bankruptcy will have an impact on your credit, its effects are not
ruinous nor permanent, and it will not bar you from obtaining credit in
the future. For example, a
Chapter 7 bankruptcy filing will remain on a credit report for 10 years, and
Chapter 13 bankruptcy for 7 years. Even though a bankruptcy filing can be seen on
a credit report, it does not mean that lenders and creditors will not
be willing to extend credit. They often do!
By affording the opportunity to discharge unsecured debts, consumers find
that they can better manage their finances, which in turn can allow them
to actually improve, not hurt, their credit. Over time and with responsible
financial behavior, including low-limit credit cards or manageable loans,
individuals who file for bankruptcy often find that they are able to build
a credit score higher than they had before filing.
Bankruptcy will make you lose everything.
This is a popular myth, and it may be rooted in cartoonish depictions of
bankruptcy where characters are left with nothing but the shirts on their
back. However, it is patently false. After all, bankruptcy was created
to help honest but unfortunate debtors, not unfairly punish them and take
everything they own. In fact, when you file bankruptcy, there are certain
ways you can preserve and protect your property, either through no-asset
cases, exemptions, or reorganization plans that allow you to make payments
toward your debt and keep your property.
You won’t be able to buy a house after bankruptcy.
This is a myth that touches on the misconception that bankruptcy forever
limits a person – something that is implicitly untrue. Bankruptcy
was designed to help consumers, and to provide them with the unencumbered
opportunity to be successful in their future. Individuals who file bankruptcy
and establish credit soon discover that many banks and financial institutions
are willing to work with them when they wish to purchase a home, especially
if their credit report indicates a marked commitment to staying ahead
in their finances since filing. Additionally, Fannie Mae and Freddie Mac
policies allow them to buy your mortgage two years after a Chapter 7 bankruptcy
or after one year of payments made under Chapter 13 (with an additional
added year if you were in
foreclosure when you filed).
Bankruptcy will eliminate all of your debts.
This is a dangerous myth that, if believed, could potentially harm consumers.
This is especially so when a person believes that bankruptcy automatically
wipes out all of their debts and chooses to increase spending and rack
up more debt under the assumption that it will be wiped away. Not only
will this not be the case, it can also subject a person to allegations
of fraud. To put it simply, bankruptcy can help eliminate debts like credit
card debt through a discharge, but not all debts are dischargeable. For
example, secured debts like student loans (in most cases), spousal or
child support, certain tax debts, and court fines and fees are not dischargeable.
Get the Information & Support You Need
Because believing myths can be detrimental to decision making and may actually
create more difficulties for consumers, working with a knowledgeable attorney
who takes the time to educate you about the process, your rights, and
what to expect as you move forward in life is critical to future success.
Having an experienced lawyer by your side can also ensure that the right
steps are being taken, and that you pursue the debt relief option most
appropriate to your unique situation.
At The Bankruptcy Law Group LLC, we have helped numerous clients navigate
their legal journeys in pursuit of financial stability, and we are passionate
about providing the personalized, experienced, and resourceful representation
they need to swiftly and successfully find solid financial ground. If
you have questions regarding your current financial situation, options
for debt relief, and how our firm can help, we invite you to
contact a College Park bankruptcy attorney from our firm for a FREE consultation.