13
August
2010

The process of Bankruptcy is often tagged with numerous folklore, false claims, misinformation, and myths.

Bankruptcy Myths

This creates a setback for many Americans as they restrain themselves from seeking the proper debt relief that they need. Such myths are usually spread by those who have certain hidden motives of ruining your state further. Here are top 6 myths about bankruptcy that restrains a debtor from bankruptcy filing:

1. Bankruptcy is embarrassing: You will often come across individuals who will make you believe that bankruptcy filing is an embarrassing thing. It is projected as if it is a crime and you are no better than criminals. If you take note of such notions, you will never be able to break the shackles of debt all through your life.

Bankruptcy is not at all embarrassing. It is a known fact that no one files bankruptcy out of sheer fun. They do it because there is no other option. It is not a luxury but a necessity! When your debts are beyond your control and no other alternative relief seems to work bankruptcy filing can be the only option. If you continue believing in the myth, you will end up losing on your assets and your financial status. Many successful business people have been known to file bankruptcy as such it is nothing to be ashamed of.

2. Bankruptcy will destroy your finances forever: When you consider bankruptcy, your finances are already in a ruined state. You may also be facing a lawsuit or two. Due to bankruptcy filing you may incur negative impacts on your credit report for nearly 10 years, but you can easily recover and get a fresh start.

3. Have to repay debts even after bankruptcy filing: The creditors in order to suit their own motives promote a myth that you should try to repay your debts even after bankruptcy filing. The fact is that the debtors are not legally or morally obliged to repay debts after they have received a bankruptcy discharge. These myths are used by the creditors to trick you into paying money even after bankruptcy. With bankruptcy your debts are forgiven and you do not need to pay the creditors later.

4. Everyone will know that you are bankrupt: Unless you are a celebrity or someone well known, your bankruptcy status is not readily leaked out. Only those people with whom you share this fact will know about your bankruptcy status. The creditors are legally bound not to disclose your distressed financial condition to anyone. Thus it is just a myth that everyone will know about it.

5. You will lose all your property: It is often preached that you lose all your assets when you file bankruptcy. This is not true as most bankruptcy cases filed by debtors are "no asset" cases in which the debtor keeps everything he owns. Moreover the federal and state bankruptcy exemption entitles for the protection of many of your assets. As such even after bankruptcy filing you can have most of your assets intact.

6. Even after bankruptcy filing, creditors will still harass you and your family: Absolutely not. After you file bankruptcy, the bankruptcy court issues an ‘automatic stay’ order to restrict your creditors from harassing you as long as the bankruptcy procedure is on. You can also get assistance from a bankruptcy attorney of your state to guide you through the legal process. The attorney notifies your creditors to contact them and not their clients regarding any legal issues. If the creditors violate the legal notifications, they have to face severe consequences.

Apart from these there are other myths that you may come across everyday. It is advisable that you do not count on such information, instead look up for right advice from the right people. Bankruptcy is undoubtedly a complicated process but it is an accepted fact that is a great option to get rid of overwhelming debts. It is better to know, see and judge rather than believing in baseless rumors. The life you have later depends upon the decision you take now. So, take every decision with slow measured steps without giving to any misgivings and myths. Wishing you a debt free life ahead!

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