Some people hesitate to file for bankruptcy because of all of the myths that surround doing so. If you are one of those people that believe it is right for you but still hesitates then you need to separate the myths from the truths regarding this financial issue. Read on.
Everyone will know about my bankruptcy
Many people fear public humiliation if they file for bankruptcy because they wrongly assume that it will be published in the newspaper or that their family members and employer will be contacted and told. This is simply not the case. The only exception to this rule is people of prominence who are constantly thrust into the public eye. It is important to note however that when you file for bankruptcy, it is a public legal proceeding.
A chapter 7 bankruptcy will wipe the debt slate clean
Some debts will be gone thanks to a chapter 7 bankruptcy but not all debts. Some examples of debts that you are still expected to pay under the law include child support, alimony and student loans. As well, any debts that you presently have that are connected to fraudulent activities still must be paid.
Everything I have will be taken from me
Many people think that filing for bankruptcy means that someone is going to come in and take everything away from there- regardless of how big or small it is- and that they will have to start from scratch.
Bankruptcy does not mean that you will be out on the street living in a cardboard box. Be aware that the laws for bankruptcy are different from state to state; however every state has exemptions in place that protect specific assets from being seized when an individual files for bankruptcy. Some examples of these assets include your home, your vehicle (this is based on the present value of it), your clothing, household belongings and money that has been saved in certain types of retirement plans.
No one will ever extend me credit in the future
Bankruptcy does place a black mark on your credit history that can remain that way for up to a 10 year period. The good news is that you will still be able to apply for credit and your chances of getting credit are within your reach. The bad news is that the credit card offers you receive will come from subprime lenders who will charge you interest rates that will be high.
Be aware that you are not likely to qualify for an unsecured credit card until you have established that you are committed to paying all of your bills on time. This could take some time. What you should do is apply for a secured credit card which means that you provide the funds that you use to borrow from. Use the card once in awhile and pay the total amount back right away. After a year or thereabouts, approach the credit card company about applying for an unsecured credit card. If the company says no then don’t fall into despair. Continue to demonstrate to them that you are a responsible and trustworthy credit cardholder. Give it six to eight months and then try again.