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Common Myths About Bankruptcy

Anyone that has ever dealt with the stress of financial hardship knows just how hard it can be to make ends meet and satisfy debt obligations. Of those people who have considered bankruptcy, most are fearful of the process simply because of the misinformation out there about the bankruptcy process. Here are a few facts behind some common myths about bankruptcy:

I Will Lose Everything- False. As one of the most intrusive fears about bankruptcy being loss of property and assets the fact is that filing for bankruptcy can actually protect your property in most situations. If you have a home or car that is at risk of foreclosure or repossession, filing for bankruptcy can put an immediate halt to those, and many other types of, collection actions. There are also bankruptcy exemption laws that offer a wide range of protection over much of your property like clothing, jewelry, retirement and insurance funds, furniture, and even some recreational or luxury items. Every asset profile is different so be sure to consult your Louisville bankruptcy lawyer for maximum exemptions.

My Credit Will Be Ruined - False. While it is true that a bankruptcy filing does remain on your credit report for up to several years, this notation on your credit report does not damage your credit score. High balances, missed payments, multiple delinquent accounts are what damages your credit score; all of which happen long before you enter the bankruptcy process. In fact, most people see an improvement in their credit score after a debt discharge. When your balances are erased and account statuses returned to good standing through a bankruptcy, you are likely to see your score go up. Even better, once your debts are discharged you are given a clean slate to rewrite a positive credit history.

Everyone Will Know I Filed - False. Filing for bankruptcy is a matter of public record, but how that information is handled goes largely unnoticed. Your bankruptcy case filing does go on a court docket and is used for purposes of communication between the legal entities and persons involved like creditors and the Trustee. This goes to say that it is rare for someone to find out you filed for bankruptcy unless they were purposely seeking out this information or you told them. Further, your personal identification number and related information is always protected as a matter of standard procedure.

Filing Makes Me A Bad Citizen - False. Millions of Americans have been stricken by the turbulent economy in recent years and a large majority of them are there through no fault of their own. Job loss, loss of a spouse, medical disability and the like are all common reasons for people needing to seek debt relief through bankruptcy. Bankruptcy laws were written for a reason and, sometimes, we all need a little help getting back on our feet. There is no shame in asking for help. It is certainly better than letting your family suffer at the hands of unavoidable and unmanageable debt.

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