NerdWallet is one of the most highly recognized financial information providers in the nation, offering advice to consumers about credit card selection, college loans, banking, mortgage loans, stock trading and insurance policies. The CEO is a board member at the National Foundation for Credit Counseling.
Last month they published an article dismissing the 5 most common myths about bankruptcy. These are the same myths we often battle with the general public, who have misconceptions about what the process really entails.
From the article:
Myth 1: You'll lose everything!
Not true. You may think filing for bankruptcy means giving up your house, car and any other assets you may have. In fact, you’re likely to keep a lot of your possessions. The majority of Chapter 7 cases are no-asset cases, meaning the debtor gives up no possessions. Under Chapter 13, you keep all of your assets, but the value of them figures into your repayment plan.
Myth 2: ALL of your debts will be relieved.
Also not true. Bankruptcy will provide you relief from most forms of debt, but there are some exceptions. Usually, recent taxes, child or family support, student loans, and debts that are a result of fraud are not forgiven.
Myth 3: It's always best to have some debt.
Not true. Filing for bankruptcy is one of the most serious financial decisions you can make, but that doesn’t mean it’s a bad idea. If your debts are more than 50% of your annual income and you see no way to pay them off within five years, bankruptcy is likely your best path toward living debt-free.
Myth 4: Filing for bankruptcy is a personal failing.
People have this idea that bankruptcy is an admission of failure or a character flaw rather than a financial remedy. But when almost 60% of bankruptcies were the result of medical bills, it oftentimes has nothing to do with personal decisions.
Myth 5: Bankruptcy will ruin your financial future.
Not true. You can expect to have limited access to credit and to pay higher interest rates for the seven to 10 years that a bankruptcy remains on your credit report. But your credit score is actually likely to rebound shortly after you file for bankruptcy.
If you feel your financial situation is out of control...contact us for a FREE CONSULTATION for debt resolution and/or bankruptcy at (731) 423-1888. The law office of T. Verner Smith has helped thousands overcome financial problems, and can help you too. Call today!
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