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5 Common Misconceptions About Bankruptcy

5 Common Misconceptions About Bankruptcy
"""Myth No. 1: YOU LOSE ALL YOUR PROPERTY IN BANKRUPTCY.

Truth:

Numerous personal bankruptcy filings are known as """"no asset"""" cases. This indicates that the debtor or debtors retain all of their property. This is due to the fact that bankruptcy allows you to retain a certain amount of property with which to start over. Exempt property refers to the items that you are permitted to retain. Depending on the jurisdiction in which you reside, certain items may be retained.

Second fallacy: BANKRUPTCY DESTROYS YOUR CREDIT FOR 7 TO 10 YEARS.

Truth:

This misunderstanding is incredible. In many instances, filing for bankruptcy will enhance your credit score. This is accurate for many debtors, as they become debt-free upon obtaining their discharge. Frequently, their debt-to-income ratio is nil. After your bankruptcy has been discharged, you can begin to restore your credit. If you are a proactive individual, it is essential to obtain new credit and pay your bills on time. If you do this consistently for two to three years, you can rebuild your credit.

The third fallacy is that you cannot discharge taxes in bankruptcy.

Truth:

Contrary to popular belief, income taxes are typically dischargeable in bankruptcy if you have the following information:

1. The taxes must be at least three years old.

2. The related return must have been submitted at least two years ago

Any additional evaluation was more than 240 days ago.

4. There was no deceit or tax evasion on the part of the taxpayer.

There are numerous reasons why these deadlines may be extended; therefore, you should not rely solely on them to determine whether or not your taxes are dischargeable.

The fourth fallacy is that medical bills cannot be discharged in bankruptcy.

Truth:

Similarly to other debts, medical expenditures can be discharged in bankruptcy. There are numerous suspicions in which individuals disagree. This misconception originates from a false source. In fact, medical expenditures are one of the top three reasons individuals file for bankruptcy, along with job loss and divorce.

Fifth fallacy: YOU MAY CHOOSE WHICH DEBTS TO LIST IN YOUR BANKRUPTCY.

Truth:

False. All debts, including those owed to family and personal friends, business partners, and potential future debts, must be reported. You cannot eradicate a single credit card through the bankruptcy process.""

" - https://www.affordablecebu.com/
 

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"5 Common Misconceptions About Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 95 times and generated 0 comments. The article was created on and updated on 31 May 2023.
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