The number one bankruptcy myth is that filing for bankruptcy will wipe out your debts completely out. This is a common myth, and it’s important to get this myth cleared up. While you will probably lose a large amount of your debt if you are forced to file for bankruptcy protection, there will come a point in the future when you’ll be able to pay back your debts without a struggle. It’s not a myth; it’s just a realistic expectation that won’t occur automatically, no matter what happens But for now, here is a short list of common misconceptions and truths about bankruptcy, put together by Bronx car accident lawyer and bankruptcy attorney John Everton.
One of the most common bankruptcy myths is that filing for chapter 13 bankruptcy will wipe out all your unsecured debts. As bad as this sounds, it is actually true. When you file for bankruptcy protection, you will be waiving your rights to the majority of your creditors. At the very least, you will not owe any money to any of these creditors, which is what keeps them from calling your creditors and asking them for payment.
Another of the bankruptcy myths surrounding filing for protection from your debts is that it will also wipe out all the debts that you currently have. While there may be some things that will remain out of reach after you file, there are plenty of other debts that will be transferred into the bankruptcy case. This doesn’t mean that you will be completely free of debt, but you will be taking on less debt than you would with a normal bankruptcy filing. In fact, many people who file for protection of their debts opt to pay down their debts instead of file for bankruptcy, because they feel that they can manage their debts better in the future. Filing will most certainly wipe out any debts you currently have, but it will not close your account or anything like that.
Bankruptcy Myths #2: I’m Dirty Or Married And Won’t Owe My Parents’ Any More! This is the most popular bankruptcy myth out there. Many people think that if they file for protection from their debts they are no longer responsible for their own financial situation, but this is not true. You may have other assets that your parents may still want to see, and you may even have debts that your parents could still pursue against you, so it’s not true that you won’t owe anybody anything. You may even have debts that your parents could still recover; in fact, your debt problems could grow worse if your parents don’t take action to recover them.
Bankruptcy Myths #3: I Can’t Get Credit After Filing! This is another popular myth, which is usually started by someone who has been turned down for bankruptcy protection and thinks they can no longer get credit because of their status. While it’s true that you cannot obtain credit during your time as a debtor, you can apply for and be granted a loan at any time, as long as you haven’t filed for bankruptcy within the past two years. After your bankruptcy is declared, any loans you’ve been denied before can be considered again.