It’s common for those facing financial struggles to be wary of filing for bankruptcy because of the horror stories that they have heard. Many people hear false information about bankruptcies that they believe to be true. This occurs in part because the different bankruptcy filings vary broadly, and what is true for one bankruptcy filing may not be true for another. Additionally, debt settlement companies may want to dissuade people from filing and may exaggerate the disadvantages of bankruptcy.
If you are considering filing for bankruptcy but you are worried about the things that you have heard, conduct independent research. The following are some of the most common bankruptcy myths debunked.
Your bankruptcy will automatically stay on your credit report for 10 years
The amount of time that a bankruptcy filing will stay on your credit report will depend on the bankruptcy Chapter you file for. A Chapter 7 bankruptcy will stay on your credit report for 10 years, while a Chapter 13 bankruptcy will be present on your credit report for seven years.
You need to earn a good income to file for bankruptcy
Your income may dictate the type of bankruptcy that you will be eligible to file for, but it should not prevent you from being able to file for bankruptcy. Generally speaking, Chapter 7 bankruptcy is best suited for those with a low income or no income at all. Those who have a steady income should consider filing for Chapter 13 bankruptcy.
You will lose your home due to bankruptcy
Many people are reluctant to file for bankruptcy because they think that it will mean that they will lose their home. However, this is not inevitable. Filing for Chapter 13 bankruptcy will help to pause foreclosure proceedings and help you get back on track with your mortgage repayments, thereby helping you to keep your home.
Filing for bankruptcy won’t be worthwhile
Bankruptcy is intended to be a tool for those who are struggling with overwhelming financial challenges. While it’s not an easy process and does require determination, it has helped millions of people to break free from debt. If you want to become debt-free, consider which bankruptcy Chapter could work best for you.