Bankruptcy is definitely not an easy decision. You should consider all other means of debt relief before you decide to file for bankruptcy. People’s biggest concern is the social stigma associated with the word. Bankruptcy is nothing to be ashamed of. In fact, it is a legal tool that allows you to rework your finances. There are several bankruptcy chapters, of which Chapter 7 is the most common. Talk to a Hagerstown, MD bankruptcy attorney, to know if you qualify for the same. In this post, we are explaining common Chapter 7 bankruptcy myths.
Bankruptcy will ruin your credit forever
Bankruptcy stays on your credit report for ten years, and while that is a considerable amount of time, you can continue to work to rebuild your score. With Chapter 7, you get immediate relief, and therefore, your creditors cannot chase you anymore. Also, it is much easier to explain why you file for bankruptcy to a lender than explaining why you kept defaulting on different debts.
You will lose all you have
There are state exemptions that allow you to retain many of your assets, including your house and car. If you have a mortgage and can continue to pay as per the repayment schedule, you can retain your house. Most of your personal belongings, furnishings, and other assets are protected unless you decide to use them to repay the debts through bankruptcy.
You can never qualify for a mortgage again
There is no point in sugarcoating this – Yes, you may have a hard time getting a mortgage after bankruptcy. However, that doesn’t mean you can never get one. Your interest rate for the mortgage could be on the higher side, and you may have to do a lot of explaining, but you can buy a home in the future. Talk to your lawyer to understand if you can apply for a mortgage as a bankrupt borrower.
You can never own credit cards again
More often than not, mismanagement of funds and credit cards leads to bankruptcy. Once your existing credit card debts are discharged, you can work on your credit again. Also, after a period of three years of filing bankruptcy, you can get new lines of credit, although the interest rates could be considerably higher for you.
Don’t let your financial situation worsen further – Talk to a bankruptcy lawyer to understand the pros and cons of Chapter 7.
