Myth 1 – Filing Bankruptcy will ruin my credit.
False. Something to consider is that your credit is not the same thing as your credit report. Credit reports act as a summary of your credit and payment history, whereas your credit simply refers to your ability to borrow money. While bankruptcy will remain on your credit report for ten years, your ability to borrow and your credit may actually increase since you will no longer struggle to pay bills that you could not afford. It may take you some time to prove your stability to a new creditor and, initially, your credit limits may be lower and interest rates higher than you would like. If you prove to be a stable debtor over time, creditors will increase your credit limit accordingly and lower interest rates accordingly. Credit restoration in most cases can be affected within as short as one to two years from your discharge date.
Myth 2 – I can only file for bankruptcy once.
False. Although there are various restrictions on being able to file for bankruptcy again, it is possible. There may be consequences to filing a second time, however, you do not become ineligible to file for bankruptcy just because you have had to file for it once before. The restrictions and consequences of filing for bankruptcy more than once are specific to your situation. Contact a talented board certified Clear Lake or Galveston bankruptcy lawyer at Gipson and Norman to learn more about filing for bankruptcy a second time.
Myth 3 – All of my assets will be seized and sold to settle my debts if I file for bankruptcy.
False. Although a trustee will be appointed to sell certain assets, not all of your assets are subject to being sold. A bankruptcy trustee cannot sell homestead or exempt assets. The type of bankruptcy that you file for will determine how much the trustee is allowed to seize and sell. In a Chapter 13 bankruptcy, for example, the debtor reorganizes their debt in order to create a more realistic payment plan. In most Chapter 13 bankruptcies, the debtor is allowed to keep all of their assets. Although certain types of bankruptcy may require you to turn your assets over to a trustee non-exempt assets, there are a variety of bankruptcies that do not. Speak with a skilled board certified Clear Lake or Galveston bankruptcy attorney to learn more about the types of bankruptcy and which option may be right for you.
Myth 4 – Filing for bankruptcy is a sign of personal failure.
Absolutely false. Taking responsibility for your debt is never a sign of failure. Many cases of bankruptcy are caused by job loss, divorce, illness, or other cases that may be completely out of your control. Bankruptcy is not a sign of defeat. Rather, it is a chance to prevent yourself from being hopelessly buried by debt and is a fresh start. Taking the appropriate steps to control your debt is empowering and will help you learn how to handle credit and debt more responsibly in the future.