- Bankruptcy solves all financial problems. Filing for Chapter 7 bankruptcy will discharge some, if not all of your debt, but in some instances you could have to pay for or surrender lose personal property such as your car or home. In Chapter 13, you will be able to keep some property, but you will create a repayment plan in which you will pay back some of your debts within a three to five year period.
- No one can file for bankruptcy anymore. This is a very big bankruptcy myth, and completely false. The law may have changed in 2005, but if you need to file for bankruptcy, you most likely can.Basically what happened in 2005 is that credit card companies and various parties lobbied Congress to make filing for bankruptcy more difficult in an effort to eliminate bad faith filings. As a result, it is now more expensive to file for bankruptcy, more documentation is involved and more hurdles were created for you to jump through, for the purpose of deterring individuals who might try and abuse the system to escape their debts.
- Bankruptcy will discharge (eliminate) all of your debt. This is not completely true and not completely false, and also depends on whether you file for Chapter 7 or Chapter 13 bankruptcy. If you file for Chapter 7 bankruptcy, you will not have to pay back any of your unsecured debt – credit cards, medical bills, pay day loans, utilities if they fall behind.If you file for Chapter 13 bankruptcy, you will create a payment plan in which you pay some your debt back over a period of three to five years. In both Chapter 7 and Chapter 13, there are some kinds of debt such as child support and student loans that cannot be eliminated.
- Bankruptcy destroys your credit score forever. When you file for bankruptcy, it will lower your credit score at first. However, it by no means prevents you from having an excellent credit score again. Chapter 7 bankruptcy will be listed on your credit report for 10 years and Chapter 13 will be on your credit report for 7 years.It is understandable if you are concerned about how bankruptcy affects your credit score. But since your credit score is so fluid, it can be repaired quickly. Everything you do post bankruptcy can improve your credit score. It is vitally important to pay your mortgage on time, make your car payments on time, and if you get a credit card to pay it off in full every month. Every positive action you take will have a positive effect on your score.
- You will lose all of your property. Regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy, you will not lose ALL of your property. Each state has exemptions, which will enable you to keep certain property.If you file for chapter 7 bankruptcy, you will be able to keep all of your assets as long as there is there is not excess equity and you are current on your mortgage payments. For example, if you own a house that is worth $200,000 dollars and you do not owe anything on it that means you have a $200,000 asset. Property such as this is then sold off to pay your debt, because it has value. However, if something does not have value, then it will not be sold off.
If you file for Chapter 13 bankruptcy, you will be able to keep most, if not all of your property. Chapter 13 is intended for individuals who are able to afford basic monthly payments, but are just not able to stay current with other payments and bills. In a Chapter 13 bankruptcy, you are able to hold on to your property by reorganizing your debt and paying some of it off over the course of a three to five year period.
- You will never be able to buy a house. This is completely false! You will probably not qualify for a new home loan right away after you have received your bankruptcy discharge. Within a varying time period after filing, however, you will be able to qualify for a loan, as you will have had time to reestablish and build your credit.
- If you’re married, you have to file for bankruptcy with your spouse. If you or your spouse have more debt than the other, filing for bankruptcy individually is an option. If you and your spouse have debts that you’re both responsible for, you should file together.
- You can file for bankruptcy as many times as you want. Whether or not you file for bankruptcy again depends on when you initially filed for bankruptcy and received a discharge what type of bankruptcy you filed for.
- You cannot file for Chapter 7 bankruptcy if you have previously filed for Chapter 7 within the last 8 years.
- You will not be able to receive a discharge from Chapter 13 bankruptcy unless 2 years have passed from a previous Chapter 13 discharge and four years of a chapter 7 discharge.
- You might lose your job if you file for bankruptcy. Although your employer or potential employer can check your credit report with your permission, the bankruptcy code prohibits discriminating against anyone who has been or is in debt.
- Only deadbeats or losers file for bankruptcy. Absolutely not true whatsoever. Most people who file for bankruptcy have to do so as the result of a large financial loss – such as medical debt or job loss – not because they are criminals. A lot of individuals don’t even file until months or years after struggling to pay off their debts.
Whether you’re deep in debt or struggling to stay up with bills, there’s a solution to your financial situation. If you have questions about filing bankruptcy, our Cleveland bankruptcy lawyers at Cleveland Bankruptcy Attorneys have the knowledge and experience to fight for your best interest. Contact Cleveland Bankruptcy Attorneys today to discuss your options at (216) 369-6715.