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The 7 Myths of Bankruptcy

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I cannot say it enough—Bankruptcy is an awesome debt relief option. The benefits of bankruptcy clearly outweigh the few negatives.

The first myth is that you won’t qualify. Whether you are working or unemployed, we can qualify you for bankruptcy. If you have the normal monthly expenses that we all do—rent, utilities, gas, car payments, then we can qualify you. It is important to consult with a competent bankruptcy attorney, so they can review your financial documents.

The second myth is that people will know I filed. Bankruptcy is a public proceeding. However, unless you are a celebrity or someone is legitimately stalking you, nobody would really find out about your bankruptcy filing. If a future employer or financial institution runs your credit report, they will see the bankruptcy, but there is no shame in this. You dealt with your finances in a responsible manner and are subsequently debt-free.

The third myth is that the court will take my home and possessions away from me. This is simply not true. Bankruptcy laws allow you to protect many, if not all of your possessions. These protections are called exemptions—-you can protect equity in your home, vehicles, retirement accounts, worker’s compensation awards, life insurance claims, jewelry, electronics, tools and so on.

The fourth myth is that you can never buy a house after you file for bankruptcy. The truth is, you can own a home 2 years after a Chapter 7 bankruptcy.

The fifth myth is that bankruptcy will ruin my credit forever. Please banish this from you mind. It’s simply not true. Your credit score will start climbing very quickly after your bankruptcy case is completed and you get your discharge paperwork from the court. Lenders will actually start sending you credit card offers in the mail because your Credit report will show your debt to income ratio as perfect, so they will more likely extend credit to you again. Furthermore, signing up for credit cards is a good way to start re-building your credit.

The sixth myth is that bankruptcy won’t stop the harassing phone calls to me or my employer. Actually, it’s the complete opposite. Once you file for bankruptcy, the creditors are legally required to stop all harassing phone calls or action against you.

The seventh myth is that my spouse will have to file too. Just because you are married doesn’t mean you have to file for bankruptcy together. If one spouse has no debt, they don’t have to file. However, your spouse’s pay stubs and bank statements are factored into the bankruptcy case.

These are just some myths surrounding bankruptcy. Contact Khan Law for a free consultation to discuss the unique details of your case.