There are a lot of things people don't know about bankruptcy. Misconceptions are abundant, especially with the new law changes that took affect in 2005. If you're confused about what bankruptcy means – and doesn't mean – then check out a few of the things listed below:
Wrong. The fact is, the only criteria to filing for bankruptcy are an inability to pay your debt as it comes due. Actually, waiting until your mortgage company is ready to foreclose to file for bankruptcy leaves you with fewer options to safeguard your financial future.
Wrong. You can begin rebuilding your credit two years after fulfilling your debt requirements under your bankruptcy agreement. Although it will remain on your credit record for ten years, many people can begin to slowly rebuild their credit rating by paying their rent, mortgage and utilities on time; then applying for a low credit limit store credit card; and finally applying for bankruptcy loan when they are ready.
Wrong. Once you begin to rebuild your credit, creditors of all types – including mortgage lenders – will begin to consider lending you money. Your interest rates may be higher, but it is possible to obtain a loan. Sure, it'll take awhile to prove to lenders that you can handle payments again, but it is possible to buy your own home following a bankruptcy.
Wrong. Some are such as personal income taxes that are more than three years old.
This one is generally true, but there are some exceptions. If the debtor can prove certain hardship, student loans may be dischargeable.
Wrong. Although there are extremely limited exceptions, these bankruptcy clauses are unenforceable and are a tactic used to scare debtors into not filing bankruptcy.
Wrong. It is illegal to fire someone for filing for bankruptcy. If, however, you apply for a new job after filing for bankruptcy, a potential employer can use the bankruptcy filing as a factor in deciding whether to hire you or not.
Now that you understand some of the misconceptions surrounding bankruptcy, you'll be better prepared to make an informed decision as to what is best for you and your family.
United States Bankruptcy Courts Each of the 94 federal judicial districts handles bankruptcy matters, and in almost all districts, bankruptcy cases are filed in the bankruptcy court...