Answering Some Questions about Bankruptcy Articles | Bankruptcy

People aren’t aware of a lot of things about bankruptcy. People have different wrong notions and these wrong notions have been on the increase ever since new laws were established in the year 2005. If you’re one of those who may be confused about the meaning of bankruptcy, then you can check out some of the issues tackled below.

You must be flat broke to file for bankruptcy.
This notion is wrong. The only criteria required to file for bankruptcy are an inability of the person to pay their debt as it is due. If you wait for your mortgage company to foreclose before you file for bankruptcy then you may have lesser options in order to protect yourself financially.

If you file for bankruptcy, you’ll never be able to get credit again.
This notion is wrong. Two years after you have fulfilled your debt requirements, you can start to slowly rebuild your credit. The issue of bankruptcy will remain on your credit records for at least a decade but people can easily but slowly rebuild their credit by paying their rent as well as mortgage and utilities on time. You can also apply for a low credit limit store credit card. The final step is to apply for a bankruptcy loan when you feel that you are finally ready.

Once you’ve gone bankrupt, you can never own a home.
This notion is wrong. As soon as you have started rebuilding your credit, a lot of creditors such as mortgage lenders and other institutions will start considering lending you money. Interest rates may be substantially higher than the normal rates but you will definitely be able to obtain a loan. It may take a while to prove to lenders that you have the ability to handle payments once more but you can buy your home after a bankruptcy.

Taxes cannot be discharged in bankruptcy.
This notion is wrong. Certain taxes such as personal income taxes that are more than three years old can be discharged during a bankruptcy filing.

My student loans aren’t dischargeable under the new bankruptcy laws.
This notion is usually true, but exceptions exist to the rule. If a debtor can prove hardship then these student loans may be dischargeable.

If I signed an agreement stating that a debt cannot be discharged in bankruptcy, it is my debt forever.

This notion is usually wrong because although there are some very limited exceptions to the rule, most of such clauses are usually void and are usually used in order to trick debtors into not filing for bankruptcy.

I can lose my job if I file for bankruptcy.

This notion is wrong. The law deems it illegal to fire someone because they filed for bankruptcy. However, if you apply for a new job after you have filed for bankruptcy a new employer may decide to use your bankruptcy filing issue in order to decide whether to hire you or not.

With this understanding of the various wrong notions concerning bankruptcy, you can better make informed decisions as to the best options available for you as well as your family.