Bankruptcy Myths & Unicorns

Bankruptcy Myths & Unicorns…

As with most things, bad information, gossip and rumors get passed around much more than accurate information and truths ever will. Additionally, more often than not, the bad stuff relates to things that just don’t exist…like unicorns for instance. Although imaginary and mythical, unicorns are creatures reserved for children’s bedtime stories, along with tooth fairies. Similar to make-believe creatures, myths and misconceptions abound for any topical area, and bankruptcy is no exception. Here’s a list of three myths that practitioners often run across:

Myth #1: Filing bankruptcy proves that I’m a failure.
While a bankruptcy filing causes one to look at him or herself in a negative light, the majority of bankruptcy cases are attributable to factors beyond one’s control: (a) loss of a job, (b) change in family status (i.e. divorce), and/or (c) a huge medical bill, which ends up costing you an arm & a leg (no pun intended). These are just a few of the primary reasons that a debtor might be pressed to file bankruptcy. However, none of the preceding reasons illustrate that the debtor was responsible for his or her circumstances per se. So, in the majority of bankruptcy scenarios, debtors should not beat themselves up or deem themselves a failure. Contrary to popular belief, life has only handed them a couple of lemons, with which to make lemonade.

Myth #2: Filing bankruptcy prevents me from buying a home.
Wrong. While attempting to buy a home immediately after filing bankruptcy may not necessarily be a good idea, most bankruptcy filers are indeed able to successfully purchase unimaginable homes, just two plus years, after filing. Although bankruptcy remains on one’s credit up to 10 years, lenders will look at a bankruptcy more favorably than defaults or late payments. Your goal (post-bankruptcy) is to reestablish credit quickly via secured credit and timely repayment of new debt.

Myth #3: I’ll lose everything, including the shirt on my back.
The cartoon that illustrates this age-old myth is the person shown going into bankruptcy court fully clothed, only to exit afterwards, naked and wearing a barrel for covering. The story-line clearly conveys the message that filing bankruptcy will require the person to forfeit everything, including the shirt on his or her back. However, nothing could be further from the truth. Depending on the state in which a person files, debtors will keep most, if not all, of their possessions. Filing bankruptcy oftentimes allows for generous federal and/or state exemptions, which act as an iron shield to protect individuals from losing their personal and/or real property.

If you have been hesitant about filing bankruptcy due to questionable myths, contact REFUGE Law to put an end to the misconceptions. Make an appointment to speak with one of our experienced bankruptcy attorneys. Bankruptcy can help give you relief from your financial worries. Call us today at (404) 618-2733 in Georgia, (713) 570-6377 in Texas, to discuss.