Most Common Misconceptions About Bankruptcy

Most Common Misconceptions About Bankruptcy

The term “bankruptcy” gets thrown around a lot and often by people who do not fully understand the bankruptcy process. Bankruptcy is a complex legal tool that can have both benefits and drawbacks for filers. Before you decide to file for bankruptcy, you should review any and all questions and concerns you may have with an experienced bankruptcy attorney. The following are only a few of the many common misconceptions about bankruptcy.

I will lose all my property. You may think that if you file for Chapter 7 bankruptcy, the bankruptcy trustee will take away all of your assets and property, including your car, your valuables, and retirement savings. While the trustee does have the right to seize certain property to pay toward your debts, there are numerous exemptions in the law that allow you to keep much of your valued property. Your attorney can help you best apply the exemptions to protect as much of your property as possible.

I will have no more debt. You may think that bankruptcy is a quick fix that will wipe away every debt you have. While many types of debts can be discharged in bankruptcy, others are not eligible for discharge and may remain. Some debts that will not be discharged include:

  • Mortgage loans
  • Auto loans
  • Certain tax debts
  • Legal judgments for fraud
  • Student loans (except in rare circumstances)

Bankruptcy can help free up funds to pay toward the debts that remain, however, and Chapter 13 bankruptcy can help you pay off your arrears on mortgages or car loans so you can avoid foreclosure or repossession.

People will judge me. While bankruptcy is commonly associated with financial irresponsibility, that is far from the only reason why people file. Some people have medical bills, loss of a job, and other circumstances that they cannot prevent that lead to bankruptcy. Bankruptcy can actually be a responsible choice instead of allowing all of your debts to continue to sit in default or collections. In addition, while bankruptcy cases are technically public record, the chances that people will find out about your case (unless you tell them) are slim.

Call 201-498-9768 today for more information.

At the Law Office of John L. Schettino, we will address any misconceptions or concerns you have regarding bankruptcy. You should not worry about what others think, but instead only worry about what is best for your financial future. Please contact our office to learn more about how bankruptcy can help you.