The process of bankruptcy is widely misunderstood. It is surrounded by stigma and it often discussed in a negative light. As a result, there are a lot of common misconceptions. Read on to learn more about the myths behind bankruptcy.
Bankruptcy Myths and Misconceptions
Some of the most common myths people falsely believe about bankruptcy include:
- You might go to jail for filing for bankruptcy: This is simply not true, as there are laws in place that clearly allow individuals to file for bankruptcy. In fact, thousands of people file for Chapter 13 or Chapter 7 bankruptcy every single year.
- You will lose everything you own: This is not true, in fact, in many cases, Chapter 7 bankruptcy completely discharges certain debts, allows you to keep your home and even all additional possessions. In Chapter 13 bankruptcy, on the other hand, you may keep all your assets, however, their value will get added into your repayment plan.
- You should pay off all your debts before deciding to file for bankruptcy: This option is not always possible. If you find yourself in a situation where your debts are worth more than half of your annual income and you are incapable of paying those debts within five years, bankruptcy is most likely your best legal option.
- Bankruptcy will ruin your credit forever: You can generally secure a new line of credit soon after filing. Though it may be more challenging for the first few months, it’s not impossible. Additionally, bankruptcy can be discharged from your record after a certain number of years. For example, if you file for either Chapter 7 or Chapter 13 bankruptcy, this will appear on your credit report for up to ten years.
- If you are married, you will both have to file for bankruptcy: This is an incredibly common belief, and fortunately, it is not true. You and your spouse do not technically share the liability for all debts accrued by one spouse. Therefore, if only one spouse is liable for debt, both spouses do not have to file for bankruptcy.
If you have any questions or concerns about filing for bankruptcy in New York, our firm is here to help. We understand that this can be a stressful process, and we are here to walk you through it each step of the way.
CONTACT A BANKRUPTCY LAWYER TO DISCUSS YOUR DEBT OR COLLECTION ISSUE
Michael D. Pinsky, P.C. represents clients in bankruptcy actions and related matters. Please call 845-394-2616 or contact the firm online to schedule a consultation.