Holding off on filing for bankruptcy for one of these reasons?

There are many myths that exist regarding consumer bankruptcy. Unfortunately this means that some residents of Florida who are struggling financially may resist filing for Chapter 7 or Chapter 13 bankruptcy. In this post we will look at several of those myths and truth behind them.

The first myth is that when one files for bankruptcy, they will lose large assets such as their house. As we discussed in the last post, the reality is that in many cases, filing for bankruptcy is the best way to hold on to an asset like one’s house. The automatic stay that is issued upon the filing stays all pending foreclosure actions and other efforts to repossess assets. This may provide an opportunity to work out a plan to keep those items.

While the loss of a job may be a reason someone is suffering financial difficulty, another myth that may be keeping some residents of Florida from filing for consumer bankruptcy is that filing could lead to the loss of their job. When one considers how important an income likely is for someone facing financial difficulty, it is easy to see how this myth could strike fear in a person. Potential filers should be assured that filers are actually protected by bankruptcy laws from losing their jobs for that specific reason.

Perhaps the most commonly focused on misstatement of fact is that anyone who files for bankruptcy will have a black mark on their financial record for the rest of their lives. While a bankruptcy remains on the record of a filer for 10 years and that person’s credit score will take a hit for years after filing for bankruptcy, good credit can be rebuilt by making good choices. These good choices include opening credit accounts, regularly charging small amounts and then paying off the balance in full. In addition, any debts that were not discharged during the course of the bankruptcy need to be paid regularly. When people who have been through the bankruptcy process follow a course of action such as this one, at some point they will likely be able to secure financing for more expensive items, such as cars and houses.

There is no question that filing for bankruptcy is a serious decision for an individual to make. Accordingly, it is important that one has all the facts surrounding the undertaking and what to expect at the end of the process. While some may think that they can navigate the bankruptcy system on their own, the best way to complete the process is usually by working with a bankruptcy attorney.

Source: Investor Guide, “Debunking Four Myths of Bankruptcy,” Jon Clarke, April 3, 2014