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

---

Four Tips How Homeowners Can Rebuild Their Life After a Foreclosure

Let's face it, if you are facing the possibilities of... Read More

Some Truth About Credit

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

Finding What is on Your Credit Report

A credit report is basically a file about you kept... Read More

My Student Credit Card Adventure

And some practical advice too!My first credit card?I remember my... Read More

Legislators Ponder New Credit Protection Laws

Legislators in Washington, D.C. are considering several credit-related consumer protections... Read More

Establishing Credit ? What You Need To Know Part 1

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

Top 7 Factors to Consider While Reviewing Credit Card Offers

Credit cards have migrated from being hip or convenience product... Read More

How to Order the Right Credit Reports to Repair Your Own Credit

In this week's article, I am going to offer some... Read More

7 Compelling Reasons Why A Prepaid Debit Card May Be Just The Financial Tool You Need

Prepaid debit cards are great financial tools and may be... Read More

Credit Enhancements: Seven Tips For Enhancing Business Credit Transactions

What are the avenues available to businesses with weak credit... Read More

Bankruptcy vs. Credit Counseling: What Should I Do?

Credit Counseling and bankruptcy are both ways to relieve the... Read More

Improving Your Credit Report

Even if you think you have a wonderful credit report,... Read More

Bad Credit Credit Cards

Chances are you've gotten your share of offers like this... Read More

The Top 5 Secrets to Managing Your Credit Cards?So They Won?t Manage You

You've probably never heard of Frank X. McNamara, but he... Read More

Debt Collection Agencies

Debt collection agencies are often a viable option for receiving... Read More

What You Need To Know About Credit Cards

What is a credit card? A credit card is... Read More

Taking Control of Your Credit History

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

Restore Your Credit Rating And Reduce Your Debts

Your credit rating affects many areas of your life. Opening... Read More

What is Credit Counselling?

Ever wondered what is Credit Counselling? There are occasions when... Read More

Credit Cards or Store Cards - Which Is Better?

Introduction In this article, a presentation is made of the... Read More

What Are The Most Common Credit Card Mistakes?

Now in a world with so many easy to get... Read More

Why Does FACTA Matter to Me?

FACTA stands for Fair and Accurate Credit Transaction Act. FACTA... Read More

Collection Agencies: What Do They Do?

Collection agencies are businesses that collect past-due bills and accounts... Read More

Make Sure Your Credit Report Is Correct to Improve Your Interest Rates And Lower Insurance Premiums

Did you know that you could make sure to get... Read More

Defeating Credit Card Debt With Self Control

Credit card debt is a major social problem in some... Read More

Big Brother Knows Whats in Your Credit Report - How About You?

Whether you are aware of it or not, credit bureaus... Read More

10 Simple Steps to Manage Your Credit

By far the greatest invention the banks have ever come... Read More

How Your Credit History Can Affect Your Life

Your credit history is an important aspect of your life.... Read More

How to Avoid Credit Card Late Fees

Everyone hates late fees and being late will cost you... Read More

Balance Transfers Introduction

Credit card balance transfer involves using a credit... Read More

Avoiding ID Theft and Credit Fraud

Article excerpted from the new book, "How to Do Space... Read More

Good Credit -- Essential for the Prospective Home Buyer

Credit is a funny thing. It can be a useful... Read More

Credit and Banking Money Saving Services

The first rule when applying for banking and credit services... Read More