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Bankruptcy Misconceptions

Almost everyone has heard of bankruptcy but many people may have misconceptions about the effects and impact bankruptcy can have on a person's life. Here are some common bankruptcy misconceptions:

  • Bankruptcy will result in the loss of your home. When filing for bankruptcy, there is still little chance of property being sold to pay creditors. House payments still need to be made and made on time. Bankruptcy laws do vary from state-to-state, and it's important to know those individual state laws, but generally a house is not seized to cover debts written off by bankruptcy.
  • You will lose your job because you filed for bankruptcy. First of all, it is unethical for a boss to fire a person because that person filed for bankruptcy. Second of all, an individual's job rights are protected by legislation. Potential employers are allowed to look at credit history, but a person cannot be discriminated against because of bankruptcy.
  • It is very difficult to file for bankruptcy. The truth is, it is not that difficult to file for bankruptcy. Find an attorney who can guide you through the process and answer any questions.
  • It will be impossible to every get credit again. Also not true. You may find yourself receiving credit card offers after bankruptcy albeit with very high interest rates. If you have questions about your future credit, ask an attorney with experience in bankruptcy.
  • All debts will be wiped out with bankruptcy. Not necessarily. Under Chapter 7 bankruptcy, certain debts cannot be erased or discharged. These include things like child support and alimony. There are other debts that are exempt from Chapter 7 or Chapter 13 bankruptcy. Federal taxes still need to be paid as do student loans and any debts accrued as a result of cases of fraud.

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