Feb. 22, 2022
Expenses can add up quickly and lead to significant debt. Credit card debt and medical debt are two common types of debt that many Americans have to find a way to pay. But sometimes, because of difficult circumstances, it can become impossible to pay back that debt.
If you’ve considered filing for bankruptcy to help eliminate or reduce your debt, but you aren’t sure about how the process works or how it will affect your future, take a look at these seven common bankruptcy myths and the truth about each.
Filing for bankruptcy is a serious legal matter, and it’s extremely helpful to have expert advice before you file. The Law Offices of David K. Blazek, P.C. can help you determine whether filing for bankruptcy is right for you and if so, which chapter you should file. Attorney David K. Blazek can help you each step of the way on your journey to financial relief. His firm serves clients in Tampa, Florida, as well as Miami, Jacksonville, Orlando, and those in Atlanta, Macon, and Columbus, Georgia.
Myth #1: It’s Hard to Qualify for Bankruptcy
You might have heard that it’s difficult to qualify for bankruptcy, but that’s not always the case. Depending on the bankruptcy chapter that you are intending to file, qualifying can be simple.
To file for Chapter 7 bankruptcy, you need to either earn less than the Florida median income or pass the Chapter 7 means test. Or, you may need to file for Chapter 13 bankruptcy. There are limits to how much debt you can have to file for Chapter 13 bankruptcy. Speak with a knowledgeable bankruptcy attorney to find out whether you qualify.
Myth #2: Debt Consolidation Is a Better Option
Debt consolidation is one option for people who are struggling to pay their monthly bills – but it may not be better than bankruptcy. With debt consolidation, you can possibly reduce the interest rate and lower your monthly payments on credit card bills by combining them into a single payment.
However, you may need to take out a debt consolidation loan to use this strategy, and the interest rate on the loan will depend on your current credit score. If your credit score isn’t above 650, that interest rate may be high.
For some debtors, you may have to take out a home equity loan or a line of credit to use this strategy – and to do that, you will need to use your home as collateral. If you don’t pay on time, then you could lose your home.
In bankruptcy, you won’t lose your home and your current credit score does not affect whether you can file. Speak with a knowledgeable bankruptcy attorney to learn more.
Myth #3: Bankruptcy Won’t Stop Creditor Harassment
When you file for bankruptcy, it activates an “automatic stay” on your existing debts that qualify. This means that creditor harassment will stop after you file. This applies to Chapter 7 bankruptcy, Chapter 11 bankruptcy, and Chapter 13 bankruptcy. Once you file, you can expect creditor harassment on your eligible debts to end.
Myth #4: You Can’t Buy Property After Bankruptcy
You may have heard that you can’t buy property, such as a home or a vehicle, after you’ve filed for bankruptcy – but that’s not the case. You’ll have the opportunity to qualify for an FHA loan only two years after bankruptcy. It may also be possible to qualify for an auto loan only a year after bankruptcy.
Myth #5: You Lose All Your Possessions
It’s a common misconception that if you file for bankruptcy, you’ll lose everything, but this is another myth. In Florida, you won’t lose all your possessions in a bankruptcy case. Your primary home, clothing, vehicle, and furniture will remain yours.
Myth #6: If You’re Married, You Both Have to File
The answer to this depends on who is responsible for the debt. If only one spouse took out the loan or has the credit card in their name, then that spouse is the only one responsible for the debt. However, if both spouses want to find financial relief for debts that they share, then they both will file together.
Myth #7: Bankruptcy Permanently Ruins Your Credit
Bankruptcy won’t haunt you forever. A Chapter 7 bankruptcy will be cleared from your credit reports 10 years after you file, and a Chapter 13 bankruptcy will clear after only seven years. Your credit score won’t be damaged forever if you file for bankruptcy.
Getting Help From an Experienced Bankruptcy Attorney
It’s important to know what’s a myth – and what’s the truth – when you’re looking to eliminate debt and find financial relief. Attorney David K. Blazek can help you set the best course of action for your financial situation. The Law Offices of David K. Blazek, P.C. serves clients in Tampa, Florida, as well as Miami, Jacksonville, Orlando, and those in Atlanta, Macon, and Columbus, Georgia. Contact the firm today to schedule a free consultation.