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Bankruptcy Myths

Bankruptcy Myths

The Truth About Bankruptcy

The myths surrounding bankruptcy are numerous and can prevent people from seeing it for what it actually is: a legal way for good people and businesses to achieve a discharge of debt and get a fresh financial start. On the other side of the coin, some people believe bankruptcy can be used to escape certain legal obligations. With the help of an Irvine bankruptcy attorney, you can learn the truth about bankruptcy and determine if the process is the right option for you. Common myths circulating about bankruptcy include:

Bankruptcy will ruin your credit rating.
Not so. Most people who file bankruptcy have already damaged their credit rating through unpaid bills, mortgages and loans. It is true that the fact you filed for bankruptcy will remain on your credit report for about 7 to 10 years but as soon as you begin to pay your bills on time you will begin to restore your credit, which can be fully accomplished in as little as 2 years.

Your creditors will continue to harass you and get even more threatening.
Completely false. When you file for bankruptcy, you are required to supply a list of all your creditors to bankruptcy court. As soon as this is done, the court notifies them and all collection actions will normally cease. There are very strict laws which collection agencies must follow in regards to this and if they do not, they can be sued.

Your house will be taken in a bankruptcy.
Not true. There are bankruptcy exemptions, which include protection of a certain amount of equity in your home. The amount can vary based on different circumstances and an attorney from the firm will be able to evaluate this exemption in your case.

All of your debts will be erased.
This is false. Certain financial obligations are not eligible for discharge such as taxes, spousal support, child support and student loans. Some taxes are sometimes eligible and a knowledgeable lawyer will know which may be eligible.

You will lose everything by filing.
One common myth that people fear about bankruptcy is that it will cost them everything they have, and this is simply not the case. No matter the state you live in, there will always be certain aspects of your property that will be exempt from the bankruptcy filing. Whether it is something common like your household goods or your life insurance, these will be protected during the process of eliminating your debt.

Both spouses are required to file for bankruptcy.
If one spouse has an excessive amount of debt, while the other does not, it isn't necessary for both spouses to file for bankruptcy. However, if the family accumulated debt is between both spouses, then naturally that would be something the spouses would want to both consider. When a single spouse files and they do not currently share in the debt, the other spouse's credit may also be exempt from being impacted by the debt as well.

Learn the Truth: Contact an Irvine Bankruptcy Lawyer

Don't let lies and misconceptions prevent you from achieving a resolution to your debt situation. Getting all of your questions answered and a clear understanding of the bankruptcy procedure will do a lot to begin bringing you some relief. If you need an Irvine bankruptcy attorney, look no further than the team at Peter Rasla & Associates, P.L.C.