Bankruptcy Myths Busted

The average American knows very little about bankruptcy. Most people probably are aware of bankruptcy's ability to dissolve debt and give the debtor a fresh start. Some of the information you might have heard is correct, but some is not. The purpose of this article is to dispel some of the most common bankruptcy myths.

1. Even if I file for bankruptcy creditors will still harass me and my family.

This is absolutely false. Bankruptcy law provides for an automatic stay. Simply, as soon as you file for bankruptcy a hold is put on all your outstanding debts and any creditor attempts to collect those debts. The law prohibits a debtor to attempt to collect, possess, or even contact the debtor in regard to the debt. If a creditor does not follow the rules, the debtor may have an action in the form of punitive damages. Basically, punitive damages are meant to punish a creditor for not following the procedures set out in the bankruptcy code. Whether a debtor has a cause of action against a creditor should be left to an attorney to answer. However what you need to know is this; once you file for bankruptcy, creditors must leave you alone or suffer the consequences.

2. If I file for bankruptcy it may cause more family troubles than I already have, maybe even divorce.

This is also false. There are two ways a debtor can file for bankruptcy voluntary and involuntary. Voluntary filing is done by the debtor. The debtor talks to an attorney or files a petition pro se and gets the bankruptcy process started. In an involuntary bankruptcy, the creditor forces the debtor into bankruptcy often times unwanted by the debtor. Voluntary filing is the result of a family discussing their options with each other and possibly an attorney and making an informed decision on the merits. Divorce is often associated with a bankruptcy with the latter filing. Voluntarily filing for bankruptcy gives the debtor a chance to set his terms and allows the debtor a free choice for the bankruptcy.

3. If I file for bankruptcy the trustee will seize all of my assets and sell them to settle my debts with creditors.

Again this is false. While it is one of the duties of a trustee to sell assets in the estate, the trustee cannot necessarily reach all of your assets. There are many factors that must be examined before this happens. The type of bankruptcy as a lot to do with how much the trustee can seize. For example, a chapter 13 is a reorganization bankruptcy. Simply, the debtor keeps the majority if not all of his assets, and forms a repayment plan to satisfy interested creditors. Even in a chapter 7 filing the debtor gets to keep many assets. These are called non-exempt assets. The debtor's house, car, clothing, furniture, life insurance, etc. are all non-exempt assets. These are just a few of the main assets. An attorney will be able to arm you with the information you need to keep even more personal property a debtor thought possible.

4. If I file for bankruptcy now, I will never be able to file again.

Surprise, this too is false. Filing for bankruptcy does not make you ineligible to file again. Without going into too much detail, just know the bankruptcy code allows a debtor to file for bankruptcy more than once. There are a few things different most importantly possibility of discharge, however you can file for bankruptcy again if you already have filed.

5. If I file for bankruptcy I will never get credit again.

This is simply false. If this were true then nobody would file for bankruptcy. Americans depend on credit and this is no different than a debtor who has filed for bankruptcy. Several banks now offer credit on a secured basis to potentially risky customers. The debtor would put up a small amount of money so as to secure payment in the future. Once the debtor proves his ability to pay, credit limits get higher. As little as two years after a chapter 7, a debtor is eligible for mortgage loans on terms equal to someone who has not gone through bankruptcy. Creditors look more to a debtors stability, as opposed to the fact you filed for bankruptcy.

Read more about bankruptcy at www.bankruptcyhome.com

Original content from http://www.bankruptcyhome.com can contact at siteadmin@bankruptcyhome.com

---

Establishing Credit ? What You Need To Know Part 1

Establishing credit is one of the most important things you... Read More

Credit Scores and Loan Applications

Keep Your Credit History Clean - Remove A Negative Credit... Read More

SuperCharged Secret 2, Credit Card Utopia

INTEREST BEWARE, THERE'S SAFETY IN NUMBERS!Note: The following is part... Read More

Online, Phone, U.S. Mail or In-Person: Where is Your Credit Card and Personal Identify Safest?

Identity theft is the fastest growing crime according to the... Read More

Credit Score - Reporting Your Financial Health

Credit score is one of the most basic, determining factor... Read More

UPS Delivers the Goods, Your Identity

Well now we add CitiGroup and UPS to the Identity... Read More

Have You Ever Opened a Checking Account?

Maybe some of you are saving it in your trusty... Read More

Credit Repair, How To

Credit repair, is in a word, vital to reestablishing your... Read More

Why Consumers Need a Nationwide Credit Freeze NOW

What do a shoe retailer, an online discount broker, and... Read More

How to Repair a Bad Credit Rating

If you have a bad credit rating, then you might... Read More

Commercial Collections: Business Finance Booster Shot

Commercial collections: fixture of the new B2B cultureIf you're in... Read More

Beware the Shopping Mall Monster

Like me, you've probably been offered a fair old number... Read More

How Your Credit Rating Affects You, and How to Check It

You might not know it, but every time you take... Read More

Dealing With A Collection Agency

Step I - Selecting A Collection AgencySelecting a credit collection... Read More

The Hazards Of Your First Credit Card

You probably don't need me to tell you credit cards... Read More

Credit Card Incentives

Credit card companies want your business. After all, lending money... Read More

Credit Reports Inside and Out

The Credit Report is like your scorecard in the lending... Read More

Taking Control of Your Credit History

Your credit history is important; in fact, in this day... Read More

How You Can Avoid Becoming A Victim Of Identity Theft

To reduce or minimize the risk of becoming a victim... Read More

Credit Reporting: How Does It Work?

In order to determine a consumer's credit worthiness, creditors and... Read More

Credit Card Balance Transfers Can Help You Stop Putting Money Down The Drain

As you probably know, interest rates are at all time... Read More

FREE Credit Report Offer - Careful, It Might Carry Hidden Charges

FREE credit checks or free credit reports. What are they... Read More

Credit Cards And Loans - So Many Options - So Little Time

Credit Cards and Loans sounds like just two things, but... Read More

Stop Credit Card Offers

You can stop receiving credit card offers in the mail!... Read More

Bailiffs & Council Tax - Knowing What To Do

This article is about bailiffs who may call trying to... Read More

Building Good Business Credit After Bad Credit

Can you establish good business credit if you have bad... Read More

The Art of Stoozing to Make Money from Credit Cards

Make Money from StoozingStoozing, this is a sophisticated method of... Read More

Top 5 Credit Misconceptions

We have all heard the rumors?from neighbors, relatives or friends.... Read More

What To Look For In A Credit Card

When you are deciding what type of credit card to... Read More

How to Deal with Hire Purchase Debt

WHAT IS HIRE PURCHASE/CONDITIONAL SALE?Although people often talk about "buying... Read More

Some Truth About Credit

Credit is currently and has been historically an integral component... Read More

Credit Reports ? Why Your Credit Score is Important

If you have never heard of a FICO score before,... Read More

7 Consumer Credit Laws You Should Know if You are Trying to Repair Your Credit

There are seven consumer credit laws you should be aware... Read More