5 Common Bankruptcy Myths

Do you know the truths regarding bankruptcy?

Many people believe that bankruptcy is some taboo remedy that must avoided at all cost and that it will do more damage than harm. This could not be farther from the truth. In fact most people in financial crisis who would benefit from bankruptcy the most, have been told misconceptions and falsehoods that keep them from doing so. Hopefully by reading this, those myths can be cleared up and you can better understand the process of bankruptcy and the viable debt resolution that it can offer.

Myth #1: Under the New Law, Bankruptcy is Impossible

In October of 2005, President Bush implemented new bankruptcy laws that mislead applicants into believing that it is impossible to qualify and if you do, it is a big ordeal and you will be audited, poked and prodded by the government to ensure that you indeed eligible. While the qualifying and filing process may be difficult, it is definitely not impossible! The government officials believed that Americans were abusing the system so they placed certain requirements on the application process. Now you will have to take a means test to ensure that your income is actually less than the average median and it is an insufficient amount to pay off your debt. With the help of a knowledgeable bankruptcy attorney, they can fill out the complex legal paperwork and ensure that your rights and assets are protected in the process.

Myth #2: Filing for Bankruptcy Makes you a Financial Failure

Did you know that more than 1,300,000 Americans filed for bankruptcy in 2011 in search of debt relief? The economy has hit hundreds of thousands of families across the nation and your financial crisis is nothing to be ashamed about. Even good, honest, and hard-working people stumble upon hard times throughout their life. Filing for bankruptcy may be the best decision you ever make if it means that you're are able to turn things around and get back up on your feet. Don't be embarrassed or feel like an outcast, remember that you are not alone in this struggle and the attorneys at the firm are here to help.

Myth #3: My Credit will Suffer for the Next 10 Years

Many people are mistaken by the fact that bankruptcy will stay on credit history for ten years, this does mean that your credit score will suffer throughout that time. Just because it is reported on your credit report does not necessarily mean that it will negatively affect it. The truth is that most people filing for bankruptcy already have an incredibly low credit score because they are late or delinquent on their payments, this have the devastating effect. After you have filed for bankruptcy, you will be able to afford and manage your payments better because most, if not all, of your past debts are discharged. This will help you improve your score quicker, if your score has not increase after 2-4 years then some other factor must be negatively influencing it other than the old bankruptcy.

Myth #4: Even if I file for Bankruptcy, Creditors will still Harass me

This is another common falsehood that has developed over time. Creditor harassment is a nuisance to have to deal with, they invade your personal life and in most instances, they violate your rights as well. This scrutiny could all come to an end by filing bankruptcy. This means no more phone call in the early morning or late evening, no more collection letters, no more garnishment and no threats of foreclosure, you and your family can be at peace again. Under Title 11 of the United States code section 362, there is an order known as "Automatic Stay." This notion puts the protection of the courts in your favor and once you file for bankruptcy, creditors are not allowed to harass or even contact you, otherwise they will face consequences.

Myth #5: I can Only File for Bankruptcy Once

The ultimate goal is usually to be financially independent so bankruptcy is not something you would want to do consistently. You are allowed to file for Chapter 7 however, once every eight years. If after those eight years you are once again in over your head and struggling with debt then you can file again. With Chapter 13, there are no restrictions on the number of times that you are permitted to apply. Hopefully though, you will never have to file bankruptcy more than once and are finally experiencing financial stability.

Learn the Truth – Talk to a Bankruptcy Attorney

Having old stubborn debt is never a good feeling, you never feel caught up and it is constantly holding you back. Don't give up, there is help for you! You may be able to experience financial freedom once again by filing for bankruptcy. It is a feasible option that the government provides for Americans who are struggling or in financial crisis. Don't let myths or falsehoods keep you from possible debt relief, take advantage of this opportunity.

It is important now that you are making informed decisions that will benefit you in the future. You should stay informed and learn about all the debt relief options that are available to you. The attorneys at Price Law Group will be more than happy to address any questions or concerns you may have about the bankruptcy process. Contact their Riverside office today for a free case evaluation.