Filing for bankruptcy is a serious decision that will impact your personal and financial life in many ways. Not only does this hold true now, but in the future as well.
If you believe any bankruptcy myths to be true, there’s a very good chance you could make a poor decision. Here are a handful of myths to clear up before filing:
- You’ll lose everything in bankruptcy. It’s true that you may lose some of your assets, but it’s not likely that you’ll lose everything. With legal exemptions, you may be able to keep most or all of the assets you value.
- A bankruptcy wipes clean all your debt. This would be nice, but it’s not the way the process works. Some types of debts and obligations, such as student loans and child support, are not impacted by bankruptcy.
- Bankruptcy will stop you from making future purchases. It’s true that a bankruptcy filing will remain on your credit report for 7 to 10 years. For this reason, securing a loan is much more difficult. However, if you devote yourself to rebuilding your credit after bankruptcy, you can once again secure a loan at some point in the future.
When you clear up these bankruptcy myths before filing, it’s much easier to begin the process with confidence. Conversely, if you assume you know everything and believe these points to be true, it could lead you down the wrong financial path.
As long as you understand the bankruptcy process and your legal rights, you can decide whether it’s the right way to better your financial situation.