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.

In 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 creditors.

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 filing separately.

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 consultation.

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