You know all those bad things you’ve always heard about bankruptcy? Most of it is NOT TRUE. Here are the Top 15 Myths your creditors want you to believe and the reason why every one of them is NOT TRUE.
First, while laws vary from State to State, every State has exemptions that protect certain kinds of property. Using Oregon as an example, there are exemptions to protect such things as your house, your car, your truck, household goods and furnishings, IRAs, retirement plans, the cash value in life insurance, wages, and personal injury claims. There is even a “wildcard” exemption of $400 that can be applied wherever you want it. In those rarer situations where you have more property than can be protected by available exemptions, there is Chapter 13. In Chapter 13 you can even keep this property by paying a higher Chapter 13 plan payment.
Second, as mentioned above (Myth2), filing bankruptcy does not generally wipe out liens. Therefore, if you want to keep a car, truck, home or business equipment that serves as collateral for a loan, you need to keep paying on the debt. If you make these payments and have exemptions to cover any value above what is owed you can rest assured you will be able to keep these items.
First, let’s get one thing out in the open. By the time you need to make an appointment to see a bankruptcy attorney your credit is already messed up, maxed out, or on a clear path to ruin. This being the case, you ultimately have no credit for bankruptcy to hurt.
Furthermore, as mentioned above, in our experience if you have not re-established good credit in 2 to 4 years after you file bankruptcy most likely it has nothing to do with the fact that you once upon a time filed bankruptcy, and it certainly has absolutely nothing to do with the fact that your credit history still shows an old bankruptcy.
The big surprise for our clients is when we tell them that filing bankruptcy can actually help them re-build their credit. Bankruptcy gets rid of debt and getting rid of debt puts you in a better position to handle new credit if only someone will give it to you. Therefore, bankruptcy is the first step in the process of re-building your credit.