3 Myths About Filing For Bankruptcy

Law Blog

Many people who could receive financial relief by filing for bankruptcy fail to do so because of falsehoods they have heard about the process over the years. Unfortunately, failing to file in a timely manner could result in economic hardships that you could have avoided. If you are hesitant to file because of misconceptions that you have heard about bankruptcy, it is important that you know the truth.

All Of Your Possessions Are Taken

In bankruptcy, some of your possessions are taken so that they can be sold to help pay off some of your debts. However, there are some assets that are safe from seizure. For instance, you can keep some of your household furniture, clothing, medical equipment, and possibly your car and home. Whether or not you can keep your car and home depends on the value of each. The bankruptcy trustee or your attorney can inform you of the dollar value amount of your assets that you are allowed to keep.

Credit Counseling Is A Better Option

For people who are reluctant to go for a bankruptcy, credit counseling sounds like a good idea. If a credit counseling service gets involved in your finances, it can negotiate with your creditors and consolidate your debts so that you can make one payment a month towards paying off your debts. To many this sounds like a reasonable solution, but in reality, it might not be the best. Credit counseling services are also businesses and want to earn money. Because of this, a service might not always present you with the best option but instead the one that will net the biggest profit for itself.

If you file for bankruptcy, the trustee in your case is an impartial participant who is responsible for doing everything according to the law. As such, you have a better chance of resolving your debts in a fair and balanced manner.

Your Spouse's Credit Rating Will Drop

The idea that one spouse filing for bankruptcy automatically impacts the other spouse is one of the most common misconceptions. Unless both spouses are filing for bankruptcy, only the one who has filed is impacted. For instance, if John files for bankruptcy, his wife Nancy's credit rating is not impacted. However, it is important to note that if John and Nancy have any joint debts, she could be left financially responsible for them when John receives a discharge through the bankruptcy filing.

The best way to address all of your concerns about the bankruptcy process, talk to a lawyer. He or she can help you assess your financial status and determine whether or not bankruptcy is right for you. One company that may be able to help you is Bildfell Law in Petrolia.


6 July 2015