While you may avoid bankruptcy because of the stigma surrounding this term, misinformation drives bankruptcy’s bad reputation. In fact, this tool allows consumers to get out of debt they cannot afford to repay.
Learn more about filing for bankruptcy by exploring the facts behind these pervasive myths.
Spouses must file for bankruptcy together
In fact, both members of a married couple do not have to file for bankruptcy. If you have substantial separate debt, you can file without your spouse.
Bankruptcy will ruin my credit for a decade
The most common type of bankruptcy filing, Chapter 13, stays on your credit for about seven years. However, you should be able to qualify for a credit card, a personal loan or even a mortgage within a few years after you receive a bankruptcy discharge.
I cannot keep any property after bankruptcy
The state allows you to exempt certain types of property from your bankruptcy filing. Depending on your financial situation, you may be able to keep equity in your primary residence, your vehicle, your retirement savings and household items.
All debts disappear after bankruptcy
Chapter 13 bankruptcy reorganizes your debts, which means you will need to repay a percentage to your creditors. Even with Chapter 7 bankruptcy, some debts are not eligible for discharge. This includes spousal support, child support, student loan debt and most types of tax debt.
Bankruptcy is more common than you might imagine. Most people who get into debt experience issues such as divorce, job loss or medical problems that result in the inability to make timely payments. Getting the true information about filing for bankruptcy can help you make the right financial decision for you.