How To Know The Facts from the Myths In Bankruptcy
By Roy Barker
Advertisements:
If you are contemplating the possibility or prospect of filing for bankruptcy,
you likely have in mind
a number of myths about the process and procedure of bankruptcy. (You
may also have some basic facts
about bankruptcy, but desire more before you make a final decision as
to whether or not you want to
proceed with such an action.) Through this article, the basic facts and
some common myths about
bankruptcy are discussed.
1. One of the most common myths associated with bankruptcy is that a
bankruptcy permanently damages
your credit history. While it is true that a bankruptcy will appear on
your credit history for a period
of seven to nine years, it does not remain on your credit report or part
of your credit history
indefinitely.
2. Another of the common myths associated with bankruptcy is that all
of your debts simply “go away” or
“vanish” after you have filed for relief. In point of fact, not all of
your debts will be discharge
through a bankruptcy action. Indeed, in recent times, lawmakers have made
it more difficult for
consumers to rid themselves of certain types of debt through the bankruptcy
process. For example, debt
that people have amassed on credit cards is no longer easy to dispose
of in bankruptcy court.
3. One of the myths (or confusions) associated with bankruptcy centers
on the different between secured
and unsecured debt. Many people assume that all debt is the same. In point
of fact, when it comes to
seeking and obtaining bankruptcy relief, there is a significant different
between secured and unsecured
debt. An example of unsecured debt is that debt that you accrue on a typical
credit card. As an
example, if you charge food, gasoline and the like on your credit card,
the balance on your credit card
is considered unsecured debt.
As an aside, you do need to keep in mind that there are some credit card
charges that end up as secured
loans. In other words, if you let the credit card become delinquent, certain
items that you have
purchased on a credit card may be repossessed. An example, of such a card
is a credit card provided by
a retailer that sells appliances and electronics. In many instances, these
stores do take a lien
interest in the property sold to you. And, if you end up defaulting on
the credit card, they can and
oftentimes do repossess the property in question.
A prime example of secured debt is the mortgage on your home. The amount
of money that you have been
provided in the form of a loan is “secured” by your home itself. In other
words, if you default on the
loan, the lender has the ability to foreclose on the home and take your
house as a means of satisfying
what is due and owing on the loan itself. Another example of a secured
loan would be the loan on your
motor vehicle. As with the house, if you default on your car loan, the
lender has the chance to
repossess the vehicle to satisfy the outstanding balance on the loan itself.
In bankruptcy, when it comes to a secured loan, you have the ability
(in most instances) to execute
what is known as a reaffirmation agreement. Through a reaffirmation agreement
you have the ability to
continue to make payments on your mortgage or car payments and you will
be able to keep the residence or
the automobile.
4. Another of the common myths associated with the bankruptcy process
is that it is easy. Many people
think that they can trot off to the bankruptcy courthouse on their own
and file a petition without a
hassle. In reality, consumer bankruptcies can be very complicated. Therefore,
in the vast majority of
cases, a consumer is well served obtaining the assistance of a qualified
lawyer to assist with the case.
An experienced lawyer can and usually does make a world of difference
when it comes to this type of legal relief for a consumer.
By understanding the myths and facts associated with bankruptcy, you
will be able to determine if bankruptcy is the best option for you. By
understanding the facts of bankruptcy, you will have taken the first step
on the road to bringing order to your financial house.
Publisher & Author, Billy Baxter - There's a free attorney selection
tool along with more relevant bankruptcy assistance, highly informative
articles and fresh news at Billy's site, see it here http://www.bankruptcy-aid.com/wordpress/index.php
Published - December 2005
|
