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3 things that simply aren't true about bankruptcy

There are many things you may have heard about bankruptcy in the past, and most things you probably assume are factual. The truth is that there are many pieces of misinformation about bankruptcy that circulate, and those falsehoods could prevent people from filing when bankruptcy really is the best choice.

There are several common myths including: "You'll lose everything," "Paying your debts is better for your credit," and, "You'll never succeed financially again if you file." The fact is that none of those myths are true.

1. You'll lose everything

You may have heard that you have to liquidate all your assets if you choose bankruptcy, particularly if you choose Chapter 7. This isn't true at all. You may have to liquidate some of your assets, but the point of bankruptcy isn't to make you start over completely. Instead, the goal is to help you clear up your debts and to have a solid foundation for an easier financial future. There are exemptions that help you avoid losing things like your primary vehicle or home, which your attorney can talk to you about.

2. You should pay your debts instead of choosing bankruptcy

Paying down your debts is a good plan, but if you see no light at the end of the tunnel or are only paying interest, there may be no end to your blight. Bankruptcy is a way to eliminate unsecured debts, not tax or student loan debts, but it can help you get rid of high credit debts or other expenses you can't pay. Yes, bankruptcy will affect your credit negatively, but you'll have significantly less debt, or no debt, to contend with once the bankruptcy is completed.

3. You'll never have a stable financial outlook in the future

Some people believe that bankruptcies are a personal failure and that they mean you'll always be unstable financially. That's not true. Bankruptcies help you become more stable, so you can get a fresh start and avoid the mistakes that led to your financial troubles.

Instead of treading water while trying to pay down bills that weigh you down, bankruptcy gives you the option of eliminating what you don't need and starting over with the basics. From there, you can build a solid financial future. Over time, your credit will heal, and you can begin to take out credit cards or mortgages when needed.

Bankruptcy may be the best option for you, but there are others to consider as well. Your attorney can help you understand all the possibilities.

Source: Nov. 30, -0001

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