Consumer Bankruptcy Myths: Part I

Anyone who is considering personal bankruptcy has likely done some internet searches for information about personal bankruptcies under Chapter 7 and Chapter 13. While there is certainly helpful information available about consumer bankruptcy, from eligibility for certain types of bankruptcy to types of dischargeable debt, there are also a lot of misconceptions out there. There are many myths out there about bankruptcy, and you need to be able to discern what is factual and what is not. We want to dispel some common consumer bankruptcy myths for you and to provide you with the information you need as you are considering your options for managing debt. We have gathered information for you from the American Bankruptcy Institute (ABI), U.S. News & World Report, and NerdWallet to help you learn more about what is true and what is false in terms of personal bankruptcy.

Myth: Your Credit Will be Ruined Forever

Many people who are thinking about Chapter 7 or Chapter 13 bankruptcy hear the myth that their credit will be ruined forever. This is simply not true. Once you file for bankruptcy, you can start taking action to improve your credit right away. Although it might take a bit of time before you are able to build your credit again fully in order to obtain a mortgage, for example, many people who file for bankruptcy can obtain a secured credit card or a retail credit card shortly after filing for bankruptcy. Within months, you can be eligible to seek a traditional credit card again, as well as other forms of credit.

Myth: If You are Married, Your Spouse Will Need to File, Too

While spouses can file for bankruptcy together, they are not required to do so. Of course, complications can arise when there are certain joint assets that will need to be managed or liquidated in a consumer bankruptcy case, but it is important for spouses to know that one of them can file for bankruptcy without the other spouse being required to file for bankruptcy, too.

Myth: All Debts are Dischargeable

Although many debts in a consumer bankruptcy case are dischargeable, you should know that there are certain types of debt that can never be discharged in a bankruptcy case, including spousal support debt and certain types of tax debt. In addition, some forms of debt can be more difficult—but not impossible—to discharge in a bankruptcy case. For instance, student loans can be difficult to discharge, but not impossible to discharge.

Myth: You Will Definitely Lose Your Home

Some bankruptcy filings can actually allow you to keep your home and to avoid foreclosure. To be sure, many debtors file for Chapter 13 bankruptcy because it can allow them to stop a foreclosure and get caught up on mortgage payments.

Contact an Oak Park Bankruptcy Lawyer

If you have questions about filing for personal bankruptcy, or if you need assistance with your Chapter 7 or Chapter 13 bankruptcy case, one of our experienced Oak Park Bankruptcy attorneys can assist you today. Contact the Emerson Law Firm to learn more about how we can help.



See Related Blog Posts:

Is Chapter 7 Bankruptcy Better for Me Than Chapter 13 Bankruptcy?

What Can I do to Improve My Credit After Bankruptcy?

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