When you are facing crushing debt, the way out is not always clear. The many myths surrounding bankruptcy do not help. Before making any decisions about how to move forward, make sure you have the facts about bankruptcy in front of you. I am attorney Wilson C. Pasley, founder of Wilson C. Pasley, PLC, in Roanoke, Virginia. I have compiled a short list of common bankruptcy myths and the truth about what bankruptcy may do for you.
Myth 1: Debt consolidations are always better than bankruptcy.
It is not unusual for debt consolidation to leave you in a worse spot than you would have been had you filed bankruptcy. At worst, some debt consolidation companies simply take your money and string you along with no resolution of your problems. At best, debt consolidation companies remain private actors with no other power than what your creditor is willing to allow. Normally, debt consolidation allows you to make even more payments on a debt that is simply unmanageable.
By contrast, filing bankruptcy will put you in the driver’s seat. You take the fight to the creditor with the full power of the United States federal bankruptcy courts behind you. The creditor must now deal with you according to the detailed laws of bankruptcy. Further, you can usually protect any retirement accounts or home equity you might have instead of liquidating it to make payments on a debt consolidation contract.
Myth 2: You can never get credit again after bankruptcy.
Some lenders specialize in providing financing to people who have filed bankruptcy. They do that because they know you have no debt, so you can now direct your money to paying your bills rather than paying off old debt. In many cases, credit scores can actually go up after a bankruptcy.
In reality, debt consolidations are seldom better than bankruptcy. Many consolidation programs do not get agreements with creditors and matters just get worse. Collections can become more draconian, leaving people in dire straits. I can explain how bankruptcy may protect your financial future.
Myth 3: You cannot eliminate medical debt.
Medical debt is one of the most common reasons people file bankruptcy. In a typical bankruptcy, debt is treated similarly to credit cards: It simply gets eliminated.
Myth 4: You will lose your house and car.
Bankruptcy is often used to save a home and car. A bankruptcy can stop foreclosure and repossession, in some cases even after the repossession has already taken place. The bankruptcy laws will allow you to protect your home and car up to a certain value.
Myth 5: It is difficult to qualify for bankruptcy now.
Bankruptcy laws enable a variety of individuals to file for bankruptcy. Even if you have a steady income, retirement accounts, a home and a car, bankruptcy can often help. Where it is not always possible to eliminate all types of debt, the law still provides for a real repayment plan enforced by the United States federal bankruptcy courts, not just a private business that is hoping for the best. In many cases, the amount repaid under a Chapter 13 repayment plan is less than the full balances owed.
For Real Answers To The Tough Questions, Call An Experienced Bankruptcy Lawyer
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.