5 Of The Most Common Bankruptcy Myths
Get the Truth from a Knowledgeable Southaven Bankruptcy Attorney
If you are currently experiencing financial troubles, like paying bills
or receiving harassing phone calls from creditors, you are likely under
a significant amount of stress. For many in situations like your own,
bankruptcy is the right choice to help you get back on track. Unfortunately,
so many people are afraid of the stigma and myths surrounding bankruptcy
that they never consider it as an option. In this page, our
Southaven bankruptcy attorneys debunk the top 5 myths people hear about bankruptcy.
People Who File For Bankruptcy Are Financially Irresponsible
Many people who file for bankruptcy have gone through traumatic life changes
that cause them to fall into this financial hardship. The most common
life events that cause individuals to file for bankruptcy are they recently
filed for divorce, lost their job, and or have fallen seriously ill. Filing
for bankruptcy does not automatically mean you are financially irresponsible;
bankruptcy provides individuals who have experienced financial crisis
a chance to start over.
Filing for Bankruptcy Ruins Your Credit Forever
This is simply not true. When you file for bankruptcy, you are getting
rid of most of the debts you owe and starting fresh. Filing for bankruptcy
will affect your credit score for up to ten years until it falls off,
but the impact will lessen over time. By absolving yourself of your major
debts are able to rebuild your credit. Some people begin receiving credit
offers a few months after filing for bankruptcy, but be careful creditors
will likely charge you higher interest rates and/or require more money down.
If you decide to file for bankruptcy, here are some things you should do
to make sure you bankruptcy was filed correctly:
After the 10 year period, contact
FICO and ensure the bankruptcy was dropped off your credit report.
- Make sure accounts that were not a part of your bankruptcy are not being
reported with a bankruptcy status.
You Will Never Be Able to Own Anything Again
Filing for bankruptcy does not exclude your ability to buy a home or car.
In fact, there are bankruptcy friendly mortgage companies who are willing
to lend to an individual with good reestablished credit. Generally, mortgage
and auto loan companies review your FICO score and decide your interest
rates, the lower your credit score the higher your interest rate could
be. There are two ways you can bring your monthly mortgage payments down
when considering buying a house.
- Consider having a family member with a higher credit score co-sign on your
mortgage or auto loan to bring your interest rate down.
- Put a larger down payment down on your house or car.
You Will Lose All Your Property
This is the most common misconception people have regarding bankruptcy.
There are two types of bankruptcy individuals can file Chapter 7 and Chapter
13. Whether or not you lose your property depends on which bankruptcy
filing is best for your situation.
Chapter 7 bankruptcy, some of your assets are liquidated to pay off pre-existing debts. However,
you may keep property that is protected under the exempt category. Mississippi
is considered an opt-out state, meaning you are required to use the state’s
outline of exempt property. Common
Mississippi bankruptcy exemptions include:
Home– you are able to exempt up to $75,000 in the equity of your home.
If you live in a mobile or manufactured home, you are permitted to exempt
up to $30,000 in equity.
Car and Personal Property—there is not a specific motor vehicle designation, but you are able
to protect up to $10,000 of your personal or household property.
Pension, Retirement or Insurance Benefits—if you are receiving disability benefits, pension, retirement or
life insurance proceeds Mississippi penal code prevents creditors from
collecting on them.
Wildcard Property – Additionally, if you are over 70 years old, Mississippi has a
wildcard property exemption that protects up to $50,000 in property from
When you file for
Chapter 13 bankruptcy, you are able to keep your property, but make a plan to pay back all your
debt in a three to five year period. Chapter 13 is typically called reorganization
bankruptcy because individuals that file for this type of bankruptcy are
required to pay back their debts. Our Southaven bankruptcy attorney usually
recommends this option to people looking to keep their property.
If You Are Married, You And Your Spouse Have To File
This is a myth is completely untrue. If you are married, you have the option
of filing with or without your spouse. Which you choose completely depends
on your situation. When considering whether or not to file together examine
your debts. If you both have significant joint debts, you may want to
consider filing together. But, if one spouse has amassed individual debt
and the other has zero to little individual debt, you may want to consider
Our Southaven Bankruptcy Attorney Can Help You
Filing for bankruptcy can be confusing and extremely overwhelming, especially
so if you are getting constant
harassing phone calls from creditors. If you or someone you know is considering filing for bankruptcy, you
should contact our qualified Southaven bankruptcy attorney for a free
You deserve a second chance –