Don't Believe These Bankruptcy Myths

In 2005, Congress made significant changes to the U.S. Bankruptcy Code. Unfortunately, a lot of misinformation about the new laws has been spread by unreliable sources and has caused a considerable amount of confusion. Some of the common bankruptcy myths are provided below.

Myth #1: Very few people are eligible for Chapter 7 bankruptcy.

The truth: Most of the people who contact our office are eligible for Chapter 7 bankruptcy.

Myth #2: Credit card debts are not dischargeable.

The truth: Credit card debts, medical bills and most other unsecured debts are dischargeable through a Chapter 7 bankruptcy.

Myth #3: I will lose all of my property if I file for bankruptcy.

The truth: Through bankruptcy exemptions and the option of debt reaffirmation, you may not lose much if any property. Many of our clients keep their home, car, furniture and all of their household belongings and personal property. In rare cases, some property may be liquidated, but speak with an attorney before you jump to any drastic conclusions.

Myth #4: If I file for bankruptcy my credit rating will be destroyed for life.

The truth: In the short term, filing bankruptcy may hurt your credit rating. However, if you are unable to pay your monthly bills on time, delaying bankruptcy simply means that you continue to make late payments and further damage your credit rating. Most people who have "slow pay" or "no pay" accounts, accounts in collections, and judgments are unable to obtain a home loan or other forms of credit.

If your Chapter 7 bankruptcy petition is granted, you will lower your debts and thereby improve your debt to income ratio. People are often pleasantly surprised to find out how quickly their credit can improve after a bankruptcy.

Myth #5: Getting a home loan is impossible after bankruptcy.

The truth: Many home loan companies will ask that you wait up to two years after bankruptcy before you apply for a home loan. After that point, however, many people are able to obtain a home loan provided they can provide adequate income verification and a sufficient down payment. Most people who have "slow pay" or "no pay" accounts, accounts in collections, and judgments are unable to obtain a home loan or other forms of credit.

Myth #6: Getting a credit card is impossible after bankruptcy.

The truth: credit card companies actually compete for the business of people who have just discharged debts through bankruptcy. Why? Because people who have discharged debts through bankruptcy may have a lower debt to income ratio.

Contact Golden Law, PC To Learn More

If you are thinking about bankruptcy, contact an experienced bankruptcy attorney at Golden Law, PC. Based in Forth Wayne, Indiana, we represent clients throughout North Indiana. To schedule a free consultation with a bankruptcy lawyer at our firm, call 260-440-7634, or contact us by email.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.