3 Bankruptcy Myths

In these times, where economic uncertainty remains even as some evidence of improvement has appeared, many people are wondering whether or not bankruptcy is the answer. In some cases, there really is nothing left that can be done. In other cases, though, there are still steps that can be taken to avoid bankruptcy. Before you make the decision, though, it is a good idea to understand these 3 bankruptcy myths:

1. All of your debts will be cleared

Many people think that bankruptcy is a “get out of debt free” card, allowing them to zero out their debt. However, it doesn’t exactly work that way. Some debt is not eligible for being cleared under bankruptcy, and in some cases you will have to repay at least a portion of what you owe.

2. You will lose your home

It is only in the rarest of cases that a person loses his or her home as a result of bankruptcy. In most cases, you cannot be ordered to sell your home to pay your debts. However, if you have stopped making your mortgage payments, your lender can foreclose on your home. But that is something different.

3. You can’t get credit after a bankruptcy

Many people believe that once they declare bankruptcy, they will not get credit in the future. While they may have a tougher time, the fact is that it doesn’t mean you won’t get credit. You will have to rebuild your history, and bankruptcy will remain for 7 – 10 years, but if you work hard to rebuild your credit, you can usually buy a home within 3 – 4 years after a bankruptcy.

It is also worth noting that you cannot be fired due to your bankruptcy. So, before you decide for or against bankruptcy, consult a professional, and consider whether or not one of these myths is influencing your decision.