A woman crying over bankruptcy with a debunked stamped near her

Common Bankruptcy Myths Debunked

Milad Hassibi May 8, 2018

Making the decision to file for bankruptcy isn’t an easy one, as it is not a pleasant situation to be in.

Many consumers are misinformed when it comes to bankruptcy and how it can help them get a fresh start.

To make things more transparent, we’ve listed and debunked the most common myths we hear about bankruptcy.

Myth 1: You will have everything taken from you.

Although filing for bankruptcy means you are officially defaulting on your loans, you actually are A man with empty pockets and a red background in a suit and tieable to keep most of your assets and other possessions.

This is due to the fact that there are “exemptions” for certain items you need for day-to-day life.

Bankruptcy is actually a great way to stop the eviction process as well.

Bankruptcy will also allow you to keep your 401k and any other retirement accounts.

These exemptions can vary from state to state, so be sure to speak with your bankruptcy attorney about them.

Although your lender won’t take your bed away from you, they could take the brand new Benz sitting in your garage to auction. If you still have questions, you can click here to speak to a bankruptcy attorney for FREE!

Myth 2: Bankruptcy will destroy your future

Bankruptcy does have a large impact on your credit score. You will have limited access to lines of credit and will have to pay much more in interest charges than somebody who doesn’t have a bankruptcy on their record.

Bankruptcy will stay on your credit score for roughly 7-10 years, and your access to credit may be limited.

Thankfully, you can start to rebuild your score easily by becoming an authorized user on somebody’s credit card or by getting a secured credit card.

Myth 3: Every single dollar you owe will be erased

Although filing for bankruptcy will erase most of your debts, there are certain things that are non-dischargeable, meaning they cannot be erased.

This includes most federally backed student loans, child support, and any unpaid taxes owed to the IRS.

The most common types of debt that are removed due to bankruptcy are debts from auto loans, credit cards, medical bills, and others. You can find out more by speaking to a FREE attorney today!

Myth 4: Everybody will know you filed for bankruptcy

This is a blatant and outright myth. Yes, bankruptcies are a matter of “public record”, but unless you are a famous and have a large fan following, it is highly unlikely that your family members or friends will ever know you filed.

Hundreds of thousands of people file for bankruptcy every year.

Unless you have a friend that loves searching court records, nobody besides your judge, attorney, and a few other court officials will know about your bankruptcy.

Your job will also not be affected by your bankruptcy unless you are unemployed and a potential employer asks you for permission to check your credit report.

Final Note

All in all, filing for bankruptcy is not a small decision and it should be well thought out. Filing for bankruptcy can be your savior, especially if you are buried under a mountain of uncontrollable debt due to circumstances out of your control.

Sadly, many of your lenders may try to tell you that bankruptcy will ruin you, but that is not true. If you are in need of a fresh financial start, bankruptcy may be the way to go.

If you have thought about filing for bankruptcy, CrediReady can help. We can help you get a fresh start and erase all your debts for good! Take a moment to fill out our free no-obligation form today to speak with you FREE attorney.

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