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Misconceptions and Myths About Bankruptcy

Misconceptions and Myths About Bankruptcy
"""Many myths about bankruptcy strike dread in the hearts of those who are financially insolvent. Unfortunately, these misconceptions discourage many individuals from filing and obtaining the assistance they require. The most effective method to combat misinformation is through education, and anyone who is considering filing but has concerns about the process should be aware of a few things.

I am a terrible person.

One of the reasons why people avoid declaring bankruptcy is the belief that doing so makes them a poor person or causes others to believe they were financially irresponsible. The majority of individuals who file for bankruptcy are not poor money administrators, but rather victims of unforeseen life events. The loss of a job, a divorce, a fatality in the family, or a serious illness can all result in financial difficulties. Filing for bankruptcy does not make a person a poor person; rather, it is a responsible decision that leads to debt resolution and a greater chance of future financial success.

I Am Losing Everything

One of the most widespread misunderstandings regarding bankruptcy is that one's assets are promptly at risk of being liquidated by creditors. Occasionally, a few assets may be liquidated to pay off debts owed to creditors. However, this is not the norm. In actuality, this only occurs in Chapter 7 cases and only applies to nonexempt property. Many of a debtor's assets, such as a home, vehicle, clothing, furniture, personal belongings, and retirement funds, are protected by exemption laws in the event of a bankruptcy filing.

I Will Experience Credit Harm

Most people have heard something to the effect of """"bankruptcy stays on your credit for ten years and is damaging"""", which is a significant concern among bankruptcy filers. A bankruptcy can remain on a credit report for up to ten years, but that does not necessarily have a negative effect. In reality, the preponderance of credit damage occurs long before bankruptcy, when payments are missed and accounts become delinquent. Credit standing is determined by payment history and account status, both of which are negative prior to bankruptcy filing. After a debtor receives a bankruptcy discharge, their negative payment histories are wiped out and their accounts are no longer deemed delinquent. This results in an almost instant credit improvement. However, there remains a great deal of work to be done. Credit rehabilitation requires time and effort; therefore, erasing years of negative account histories takes at least a year or two, even after negative remarks have been removed.

" - https://www.affordablecebu.com/
 

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"Misconceptions and Myths About Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 102 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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