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The Facts Behind Bankruptcy Myths

The Facts Behind Bankruptcy Myths
"""When individuals hear the word bankruptcy, they frequently imagine the worst. The fear of losing assets and having their credit harmed discourages many in need from filing for bankruptcy. In reality, much of what is said about bankruptcy is false or exaggerated. Before abandoning a potentially valuable process, familiarize yourself with the fallacies and realities surrounding bankruptcy.

Losing Property

In an effort to collect a debt, it is common knowledge that creditors may have the right to confiscate and liquidate certain assets. However, this is much more likely to occur if you do not settle your debts and continue to miss payments. In a Chapter 7 bankruptcy proceeding, the court will assess your debts and assets to determine if asset seizure is appropriate. In the majority of cases, a person who qualifies for Chapter 7 bankruptcy will also have few expendable assets sufficient for debt repayment. Moreover, bankruptcy exemption laws protect the majority of significant assets, including a home, vehicle, personal property, and retirement funds. Since you have negotiated a repayment plan, it is extremely rare for a Chapter 13 debtor to liquidate assets. As long as Chapter 13 payments are made in accordance with the plan, your assets are protected from creditors.

impaired Credit

One of the most widespread misconceptions about bankruptcy is that it negatively affects credit. This is simply untrue; however, it is the delinquent account status and missed payments that cause the most damage. There is no direct impact on your credit score as a result of declaring bankruptcy. In fact, bankruptcy eliminates both your debts and negative account status. When your account is in good standing, your credit promptly begins to improve. Following a debt discharge, it is not uncommon for a person's credit score to improve. Following a bankruptcy, it is much simpler to restore credit than to continue to allow accounts to become delinquent.

A Poor Reputation

Numerous individuals fear that their peers and family will learn of their bankruptcy filing. Although bankruptcy filings are a matter of public record, the general public rarely encounters this information. Bankruptcy filing information is available to the public for inquiry and use by the courts, but there is no valid reason for friends or family to search for this information. Unless your case is part of a high-profile filing, a third party takes malevolent action against you, or the case becomes part of a divorce proceeding, the filing status of your case should remain private. Some individuals are worried about how a filing will affect their employment. In general, employers would not have access to this information unless (a) they performed a random credit check or (b) they were ordered to garnish your wages. However, there are laws that prohibit an employer from discriminating against a bankruptcy filer.""

" - https://www.affordablecebu.com/
 

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"The Facts Behind Bankruptcy Myths" was written by Mary under the Finance / Wealth category. It has been read 84 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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