Busting Bankruptcy Myths

by | Feb 29, 2012 | Law And Politics

There are many different things that can cause financial devastation including a layoff from your job or unexpected medical bills. If you have fallen behind on your bills for one of these reasons and feel as if you have exhausted all of your options for debt relief, it can be extremely frustrating and emotionally draining. There is still another option, however. You may want to file bankruptcy in Brockton, MA to get back on your feet again. Many people don’t consider filing bankruptcy as an option because they think they will lose their house or all of their assets. This is not true. There are a variety of myths surrounding bankruptcy that prevent people from considering it. Here are some of the most common bankruptcy myths, busted.

Probably the biggest misconception associated with bankruptcy is that no matter what type of bankruptcy you file for, all of your assets will be liquidated and you will end up homeless. While Chapter 7 bankruptcy is liquidation, so to speak, you will not lose all of your personal property. If you choose this type of bankruptcy, a judge appoints a trustee to take your assets and sell them to pay as much of your debts from the proceeds. Both state and federal bankruptcy laws allow some assets to be exempt from liquidation, including your car, your home and a small amount of money for living expenses. An experienced bankruptcy attorney will usually file a petition in court to protect even more of your assets. Chapter 13 bankruptcy, on the other hand, is a reorganization of debt that requires no liquidation of assets. The court uses a mathematical formula is used to determine how much money you can pay towards your debts for a period of three to five years. At the end of the allocated time, any remaining debts are forgiven.

Another myth that prevents many people from choosing to file bankruptcy in Brockton, MA is that it will destroy their credit score and they will never be able to obtain a loan again. The truth is if you are already behind on your bills your credit score is already damaged. Many debt collectors and credit reporting agencies look at filing Chapter 13 bankruptcy as the first step in turning your finances around. With the help of a bankruptcy attorney, you can rebuild your credit in a relatively short amount of time. As long as you make the court required payments and continue to stay current on your bills after the bankruptcy period ends, you will have a satisfactory credit score and should be able to obtain loans when needed.

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