Thorough understanding of the bankruptcy facts is necessary to deciding if it is the right alternative for a given situation. In the last few years, the country has experienced high numbers of bankruptcy filing. This is mostly due in part to the recession and has altered many people’s view on chapter 13 and chapter 7 bankruptcies. Despite this, there are still some Knoxville residents who are still hesitant about initiating bankruptcy proceedings. This may be as a result of incorrect information deem as truth. For this main reason, it is crucial that debtors understand the facts about bankruptcy in order to get the help they truly need. In this article, we would discuss some general myth about bankruptcy and why the truth.
Bankruptcy Solves All Financial Issues
Under chapter 7 bankruptcy, you would most likely be able to discharge some, if not all your debt. However, in some situations, you may have to pay for or surrender personal property such as your home or car. In chapter 13, you are likely to keep some property, but you will have to create a repayment plan in which you will need to pay some part of the debt within a three to five year period.
No One Can File Bankruptcy Anymore
This is completely false. While the law was changed some years back, if you need to file bankruptcy, you still can. What happened in 2005 when the bankruptcy law was amended is that credit card companies and some other parties lobbied congress to make bankruptcy filing a little more difficult in an effort to eradicate bad faith filings. As a result of this, bankruptcy filing is now a lot more expensive with more documentation involved and a lot more obstacles were created for you to jump through. This is done for the purpose of discouraging individuals who might want to abuse the system to escape their debts.
Bankruptcy Eliminates All Your Debts
This is partially true and also depends on whether you are filing for a chapter 13 or chapter 7 bankruptcies. If you file for chapter 7 bankruptcy, you will be excused from paying back any of your unsecured debts like medical bills, credit cards, payday loans, and utilities will also fall behind. However, under the chapter 13 bankruptcy, you will create a repayment plan in which you will have to pay your debt over a period of 3 to 5 years. Under both bankruptcies, debt like student loan and child support cannot be eliminated.
Bankruptcy Destroys Your Credit Card Score Forever
Your credit score will go low when you initially file for bankruptcy. But this does not prevent you from having an excellent score later on. Chapter 13 bankruptcy will be listed on your credit report for 7 years and chapter 7 for 10 years. Having concerns about bankruptcy is understandable, but since credit score are so fluid, it can be repaired easily and quickly. Everything you do after bankruptcy can significantly improve your credit score. It is important that you pay your mortgage and car payment on time, and if you get a credit card to completely pay it off every month. Every positive action will reflect on your credit score.
You Will Lose All Your Property
Regardless of whether you are filing chapter 13 or chapter 7 bankruptcy, you will not lose all you property. Every state has exemptions and in Knoxville, you will be allowed to keep some certain property. You will be allowed to keep all your assets if you file chapter 7 bankruptcy as long as you are current on your mortgage payment and there is no excess equity.
For instance, if you own a house that is worth $400,000 and you do not owe anything on it, which means you have a $400,000 asset. A property like that will be used to pay your debt, because of its value. A valueless property will not be sold off.
When you file chapter 13 bankruptcy, you will also be able to keep most, if not all of your property. This bankruptcy is intended for people who can afford basic monthly payments but are not buoyant enough to stay current on other bills and payments. You are able to hold on to your property by reorganizing your debt under chapter 13 bankruptcy. You will have to pay some of it over the course of 5 to 5 years.
There are quite a lot of misinformation about filling bankruptcy, repairing your credit score after bankruptcy and your ability to have a financially secured future. At The Sexton Law Firm, we can debunk those myths and see if bankruptcy is the best options for you while helping and help you get back on living a successful and financially fulfilling life. Contact the Sexton Law Firm Today On. For more info @ http://thesextonlawfirm.com/practice-areas/knoxville-bankruptcy-attorney/