For most people, filing for bankruptcy can be an intimidating process owing to the various myths and misconceptions associated with it. While it is undoubtedly an undesirable situation where you need to file for bankruptcy, it can nevertheless act as an invaluable asset in case you are experiencing severe financial hardships. In order to recognize the various beneficial aspects of this procedure, it is important to verify and clear the misconceptions associated with it.
- Bankruptcy courts seize all your assets: Though in some forms of bankruptcy the court seizes your non-exempt assets to make payments to your creditors, there are several arrangements in the law that protect individuals from losing control over many of their valuable properties such as furniture, household goods, jewelry, clothing, insurances, inexpensive vehicles and also home in certain circumstances.
- Everyone would know your status of being bankrupt: The fact that a bankruptcy filing is considered part of public record doesn’t mean that the information would be available for anyone to see. People would actually have to make efforts to search for these records before they can access them. When it is said that bankruptcy filings are public records, it means that the records are permanently stored in court documents and would probably be found on a debtor’s credit report. People come to know about bankruptcy filing only if an individual in involved in some kind of scandal or fraud case. Bankruptcy courts ensure privacy for individuals filing for bankruptcy unless they want to share their bankruptcy information publicly.
- Bankruptcy damages credit records: Though it can be quite an intimidating fact that a bankruptcy filing tremendously impacts your credit records, there is definitely a positive side to it as well. Since a bankruptcy court closes all your bank records and credit cards the moment you are declared bankrupt, all your past financial records get deleted. This enables you to make a fresh start and make a clean credit record in future.
- You cannot file for bankruptcy more than once: You can certainly file for bankruptcy again, even if you have filed for it once. As a matter of fact, you can opt for bankruptcy as many times as you need. However, in some cases the court does not allow you to make petitions as frequently as you want. For example, in case of chapter 7 bankruptcy, you need to wait for a minimum of 8 years between two filings in a row.
A Bankruptcy filing can help individuals immensely in getting rid of the constant harassments caused by creditors. Once you file for bankruptcy, and your petition is accepted, there is no way your creditors can contact you any more. Bankruptcy courts prohibit creditors from communicating with you from the moment you are declared bankrupt. This is a huge relief from the continuous pressure and stress caused by lenders.
Despite the fact that bankruptcy undoubtedly affects your financial records and can permanently bar you from certain job options, there are some positive aspects that can actually help you immensely in dealing with a severe debt situation and start your life afresh.