Though bankruptcy has become more common than ever, it is still surrounded by quite a few misconceptions and myths. Read on to get the facts about bankruptcy before you make an appointment with a bankruptcy attorney.
Myth: Bankruptcy is usually caused by credit card debt.
Though credit card debt can play a role in many bankruptcy proceedings, it is not the number-one cause of financial troubles. Nearly 60% of bankruptcy filers cite medical bills as the main cause of their situation. Even filers who have insurance can be saddled with bills in the tens of thousands of dollars after a major illness or hospitalization, putting major financial strain on many families.
Myth: You will lose your home if you file for bankruptcy.
Depending on whether you file Chapter 7 or Chapter 13 bankruptcy and your particular situation, there is a good chance you can keep your home despite bankruptcy. Chapter 13 filers generally keep their homes and become current on payments. Chapter 7 filers can opt to reaffirm their mortgages and continue to pay after the bankruptcy process has been completed.
Myth: You can only file for bankruptcy once.
You are able to file for bankruptcy more than once; however, you will need to wait a number of years between filings. Filing for multiple bankruptcies may not always be the wisest financial course, however, because of the effect they will have on your credit score.
Myth: You can choose which debts to discharge in bankruptcy.
During bankruptcy proceedings, you must list every debt and asset you have. Failure to do so may result in allegations of fraud or the dismissal of your bankruptcy petition. Your bankruptcy plan will encompass all your debts. If there are any you would like to continue to pay after bankruptcy, you can reaffirm them and return to the old payment terms.
If you’re considering filing for bankruptcy, speak to an attorney. If you live in the San Francisco area, call (650) 348-2044 to schedule an appointment with the Law Offices of Gary Brenner to discuss your bankruptcy options.
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