Common Misconceptions about Bankruptcy

It’s easy to feel buried as debt mounts and interest rates continue to dig a deeper hole. Dealing with the accumulation of debt is one of the most stressful things a person can deal with, but it isn’t impossible to overcome. Buckling down and making serious changes to your spending habits can help you slowly dig your way out, but other times it can seem like an impossible feat. When the debt is too great, bankruptcy can be considered as an option, but many people have misconceptions about exactly what it entails. Here are some of the most common ones:

All Debts, Regardless of Origin, are Forgiven

Some debts will be wiped away after filing for bankruptcy, but there are exemptions from that rule. Income tax debts and student loans are not forgiven as part of Chapter 7 or Chapter 13 bankruptcy cases. If you file for Chapter 13, you will be required to create a 3-5 year plan for repaying some or all of your debt.

You Will Lose All of Your Property

A Chapter 7 bankruptcy filing will have you liquidate many non-exempt properties to pay back debts, but things like clothing or equity in a car won’t be taken. Chapter 13 does not require the selling of any assets.

You Will Lose Your Home

Many people think that when you file for bankruptcy, you automatically lose your home. This isn’t always the case, as it depends on factors like which type of bankruptcy you file for, the amount of equity in your home, and if you are able to pay the mortgage after the bankruptcy process is over with.

There is a Moral Issue with Bankruptcy

Some think that filing for bankruptcy is dishonest or is a form of stealing from creditors, but the process exists to provide a safety net. You are not running away from a mistake or getting off without repercussions, and in the eye of the law, you are doing nothing wrong if it comes to that.

The Importance of a Good Lawyer

Filing for bankruptcy is not something to be taken lightly, and you should always consult an attorney who is experienced in bankruptcy law first. At the BCN Law Firm in The Villages, our team is well versed in all aspects of the relevant laws surrounding bankruptcy filings, and we can help put together your application and bring you peace during a stressful time.

Contact the Attorneys at the BCN Law Firm today at (352) 775-4739.