Thursday, March 5, 2009

Bankruptcy myths - Can be misleading:

The term 'bankruptcy' leaves a negative impact on our minds, although its a very wrong concept. There are a number of myths about bankruptcy that prevail among the common people and they get circulated through word of mouth. These are false notions that prevent people from filing for bankruptcy even in time of crisis.

I am sharing some of the common bankruptcy myths here:

  • People filing for bankruptcy must have done something wrong: This is one the most common myths, which is 100% false and unfair to consumers. This is a baseless claim, anyone can fall upon hard times and needs to file bankruptcy.
  • People fear that they will lose all their possessions: In fact, many of the times, people filing for bankruptcy do not lose anything. The bankruptcy laws differ from state to state, and mostly they provide specific exemptions to protect your property. Although there are certain limits, but exemptions can allow you to retain a home, a car, and any other personal property.
  • The credit score will be badly hurt: It is true that a bankruptcy will be listed in your credit report, but it won't ruin your credit score for an extended time period. Bankruptcy helps you to eliminate all your previous debts and you can start afresh to rebuild your credit. Moreover, you must be surprised to know that if your credit score is below 600, filing for bankruptcy can actually build your score.
  • Both spouses will have to file bankruptcy: Not necessarily. In some cases both of you have to file when the debts are in both names, otherwise there is no compulsion. Its better to consult with your attorney and accordingly choose the better option.
  • Bankruptcy is a very difficult process: While it is possible to do the filing process yourself, there's no harm in consulting with an attorney. And now, with availability of resources on the internet, it has rather become an easy process. Just be aware of the frauds and scams.

The fact is: debt is the problem and bankruptcy is the solution. So, do not let such myths mislead you and prevent you from getting the financial help that you deserve.

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