Tuesday, April 14, 2009

Top 10 Misconceptions About Bankruptcy



By Nicholas Hall

There are many misconceptions about bankruptcy that may cause an uninformed individual to either miss out on an opportunity or to go about solving their financial difficulties the wrong way. The first and most important issue to understand is that you do not have to be flat broke to file for bankruptcy. The only real requirement is that you must be unable to pay your bills as they become due. In all reality, you do not want to wait until you are flat broke to file for bankruptcy. If things are looking grim you want to make the move sooner than later, because congress allows you to keep some of your possessions and property.

Another common misconception is that a person who filed for bankruptcy at some point in their life will never again be eligible to receive credit. This is not true, if you file for bankruptcy it will stay on your credit report for only 10 years. If you are planning on filing for bankruptcy you most likely already have poor credit, so this is probably the best thing you can do to get yourself back on track to having good credit in the future.

On top of the fact that you will be able to receive credit down the line, you will also be able to buy a home and receive a mortgage. Lenders are always willing to take risks, especially if you have proven yourself after your bankruptcy. However, you will most likely be charged a higher rate. Also, you cannot lose you job over filing for bankruptcy because it is against the law. That means that even though you will be filing for bankruptcy you will still have income; but you will also still have to pay you taxes, which are not discharged during bankruptcy.

Sources:

http://www.nysscpa.org/cpajournal/2005/505/perspectives/p18.htm

http://www.wewritereviews.com/the-five-most-common-bankruptcy-misconceptions/

http://www.arizonadebtrelief.com/11%20Misconceptions.htm

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