I will forfeit my entire fortune!
The most prevalent misconception is that the government will enter your home, seize or liquidate your possessions, and force you to start over with nothing but a cardboard box. While state bankruptcy laws vary, every state has exemptions that can be used to protect assets such as your residence, car (up to a certain value), money from a qualified retirement plan, and household goods and clothing. Most individuals will survive a bankruptcy and retain the majority of their assets. Just like the rest of us, if you have a mortgage or car loan, you will retain the property as long as you continue to make payments.
Everyone will be aware of my bankruptcy filing!
There is a belief that everyone they know and don't know will be aware of their bankruptcy filing or impending filing.
Only your creditors will know the truth unless you have a large audience, such as a prominent public figure. While it is true that bankruptcy is a public proceeding, the vast number of applicants filing makes it impossible to publish all bankruptcy proceedings, and few publishers have the resources or desire to do so.
I am only allowed one bankruptcy filing!
You can file for bankruptcy multiple times, but doing so is not a good idea. The new bankruptcy laws that went into effect in October 2005 increased the time between filings. You can only file for Chapter 7 once every eight years, you must wait two years between Chapter 13 filings, and you must wait four years between Chapter 7 and Chapter 13 filings. Obviously, multiple bankruptcies are a terrible notion, and they can become a way of life if you do not learn to properly manage your finances! This is not healthy for your karma or credit score, let alone your peace of mind!
Never again will I be able to obtain credit or credit cards!
This is the most widespread misconception regarding bankruptcy. In reality, this is quite the opposite! It won't be long until you begin to receive credit card offers again, and other credit offers are likely to follow. You will simply have to pay higher interest rates for some time. Due to the fact that bad credit credit cards are among the simplest to obtain, you have the opportunity to start over with these cards and rebuild your credit from there. You do not have to resort to illegal means, such as your neighborhood loan shark, to obtain funds. If, like the rest of us, you intend to purchase a new car or another home in your lifetime, you will need to begin reestablishing credit. This will make large purchases simpler, as your interest rates will be lower if you have a new credit history, and it makes sense to use credit cards in this manner. If you file for bankruptcy, you are not required to list any creditors with whom you wish to maintain an account, including credit card companies, but there are negative credit credit cards for those who have no other option.
Only cheats declare bankruptcy!
The majority of individuals file for bankruptcy protection due to a significant life-altering event, such as a divorce or the loss of a spouse or job. Occasionally, a severe illness has made it difficult for those who have been struggling to pay their bills and debts for months to realize they need assistance. The only alternative is to continue drifting further behind.
Insolvency will eliminate all of my debts!
You desire! There are debts that cannot be discharged by bankruptcy, including student loans, debts incurred as a result of fraud, child support, and alimony, and a judge will likely not discharge a court-ordered debt to a person who has sued you.
I can empty out all of my credit and credit cards without incurring any costs.
This is known as credit fraud, and a judge will be extremely irritated by it because so many people have attempted it. In the past, student loans were discharged in this manner, particularly in the 1970s when graduates simply filed for bankruptcy. Before you file for bankruptcy, the trustee assigned to your case will investigate and review all of your purchases and financial transactions. Beware if fraud is suspected! You could jeopardize any protections to which you are entitled if you declare bankruptcy.
As with your credit and credit cards, bankruptcy protection exists to assist those who truly require it and is not a tool to be abused. Utilize it prudently, just as I counsel you to utilize your credit! Using credit responsibly can save you more than $500,000 in interest charges over the course of your lifetime. This money should be in your possession. This is part of your ability to pursue your portion of the American Dream, and like your other endeavors, it begins with prudent credit usage! This means utilizing all available information sources, including my websites, to your advantage. My newsletter will provide you with the most recent credit management advice, and I urge you to subscribe.
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