Bankruptcy – Exposing Myths About Credit And The Fear Bankruptcy Will Destroy It!

Most people really do believe that they will lose everything they have and will never get credit again. This is based mostly on fear and little on facts. The stigma attached to bankruptcy reinforced by a lot of creditors, makes most people who would benefit from it the most, avoid it. Here are some of the real details.

I will lose everything I own!

Most common is the misconception that the government will come into your home and take or liquid everything you have and you will start over from inside a cardboard box! While bankruptcy laws vary from state to state, every state has exemptions that you can use to protect certain assets, such as your home, and your car (only up to a certain value), money from a qualified retirement plan plus your household goods and Clothing. For most people, they will pass through a bankruptcy and keep most everything they own. If you have a mortgage or a car loan, you will keep those items as long as you keep making those payments, just like the rest of us!

Everyone will know I filed for bankruptcy!

There is a belief that everyone they know and those who do not know will have filed for bankruptcy or are about to.
The truth is that unless you are a person with a wide audience, such as a prominent public figure, the only ones who will know it are your creditors! While it's true that bankruptcy is a public proceeding, the sheer number of so many applicants filing makes it impossible to publish all bankruptcy proceedings and very few publishers have the manpower or inclination to do so.

I can only file for bankruptcy once!

You can file for bankruptcy more than once, but this does not mean it's a great idea. The bankruptcy laws that went into effect in October 2005 made the length between filings a little longer. You can only file for Chapter 7 once every 8 years, you have to wait for 2 years to repeat a Chapter 13 and wait for 4 years between Chapter 7 and Chapter 13. Of course, multiple bankruptcies are really bad ideas and it can become A way of life if you fail to learn to manage money properly! This is not good for your karma or your credit rating, not to mention your piece of mind!

I will never be able to get credit or credit cards again!

This is the largest of the misconceptions people have about bankruptcy. The truth is this is quite the contrary! It will not be long before you start seeing credit card offers again and other offers for credit are very easily to follow. Your just going to have to pay some higher interest rates for awhile. Since bad credit credit cards are some of the easiest to get, you have an opportunity to start over with these types of credit and you can work your way back from there. You do not have to go underground, like to your neighborhood loan shark to get money again. I do not advise anyone to go out and run up their debt again, but if your planning to buy a new car or another home in your lifetime, like the rest of us, you will have to begin reestablishing credit again. This will make those large purchases easier because your interest rates will be lower if you have some sort of new credit history and credit cards make sense in this manner. If you file for bankruptcy, you do not have to include any debtor you want to keep an account with, including a credit card, but there are bad credit credit cards for those with no choice.

Only deadbeats file for bankruptcy!

Most people file for bankruptcy protection because of a major life changing experience, such as a divorce or a loss of a spouse or job. Sometimes even a serious illness has made it hard for those to keep struggling to pay their bills and debts for months until the realization sets in that they need help. The only other choice is to keep falling even further behind.

Bankruptcy will wipe out all my debts!

You wish! There are debts that can not be discharged by a bankruptcy and some types of these are student loans, debts that occurred as a result of fraud, child support, alimony and a judge will not likely discharge a debt you have been ordered to pay to someone who Sued you.

I can max out all my credit and credit cards and do not have to pay for any of those things!

This is called credit fraud and a judge will get real cranky with this one because so many have tried it! Student loans used to be discharged this way, especially in the 1970's when students would just declare bankruptcy after graduation. The trustee in your case will know what to look for and he or she will examine and review all your purchases and financial transactions right before your filing. If fraud is suspected, watch out! You could put any protection you are entitled to with a bankruptcy in jeopardy!

Bankruptcy protection is there to help those of you who really need it and not a tool to abuse, just like your credit and credit cards. Use it wisely just like I advise you to use your credit! Using your credit can easily save you $ 500,000 or more in interest charges in your lifetime! That money can and should be in your pocket. This is part of your being able to pursue your share of the American Dream and like your other pursuits, beginning with using your credit wisely! This means using the information from all available sources, including my websites to your best advantage. My newsletter will help you with the latest in credit management tips and I encourage you to subscribe to it.

Source by Duane Bell

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