To make filing for bankruptcy easier, nerdwallet.com dispelled five bankruptcy myths recently, like “you will lose everything in bankruptcy,” and “you won’t be able to rebuild your financial future.”
The five myths of bankruptcy
Here are five myths about bankruptcy, according to nerdwallet.com:
- Myth: “You’ll lose everything.” The likelihood is you can keep a lot of your possessions. The vast majority of Chapter 7 cases are no-asset cases, meaning the debtor gives up no possessions. There are two reasons for this. First, you can carve out some basic assets, called exemptions, that are necessary for day-to-day life. What you can exempt varies from state to state, so be sure to discuss exemptions with your bankruptcy lawyer.
- Myth: “All of your debts will be relieved.” Generally, in bankruptcy you cannot be forgiven those debts for which you are deemed personally responsible. Examples include recent taxes, child or family support, debts resulting from fraud and student loans.
- Myth: “Paying off your debts is a better option.” Filing for bankruptcy is serious but not necessarily bad. If your debts are more than 50 percent of your annual income and you see no way to pay them off within five years, bankruptcy is likely your best path toward living debt-free.
- Myth: “Filing for bankruptcy is a personal failing.” It helps to know that bankruptcy is a remedy, not an admission of failure or a character flaw. For example, medical bills lead to many bankruptcies at a time when paying to treat illnesses and for hospital visits outpaces wages.
- Myth: “Bankruptcy will ruin your financial future.” There’s no way around it: You can expect to have limited access to credit and to pay higher interest rates for the 7-10 years that a bankruptcy remains on your credit report. However, there are a lot of ways to restore your credit after bankruptcy, such as getting a secured credit card. You will face some limitations but taking advantage of the right financial products can go a long way toward helping you get back on the right path.
Smart decisions can help in restoring your credit record. Steps include adding new credit like secured credit cards, punctually paying off all debt, new and old and keeping card use to 30 percent or less of your available credit, according to USA Today.
Dispelling bankruptcy myths like “You’ll lose everything” and “All debt is forgiven” constitutes the kind of guidance available from South Carolina bankruptcy attorneys Matthews & Megna LLC.
Contact South Carolina bankruptcy attorneys Matthews & Megna LLC for bankruptcy help today.