Mike Sullivan, the director of education at nonprofit credit counseling agency Take Charge America, said that not everyone is aware of the wider repercussions of filing for bankruptcy. “For some, bankruptcy is the best option, but few people truly understand the ins and outs of filing.”
He listed seven common beliefs that are held by many people, but which are actually incorrect:
- Bankruptcy will erase all debt. Many types of debt will be cancelled out by filing for bankruptcy, but some will not. Student loans, child support, alimony, criminal restitution and debts resulting from fraud will all still stand in spite of a bankruptcy filing.
- Bankruptcy causes people to lose everything. Although the laws are different state by state, each has exemptions that allow people to keep assets such as homes, cars, household goods and retirement savings.
- Married couples must file for bankruptcy together. If debt is in one person’s name only, couples may not have to file jointly. Only people with joint accounts or debts will need to file together.
- People have to have a lot of debt to file for bankruptcy. In fact, there’s no minimum amount of debt required to file for bankruptcy. However, there are costs involved with filing that may make an impact on whether or not it’s a wise choice to file for bankruptcy. The cost of filing ranges from a few hundred to a few thousand dollars.
- Bankruptcy causes people to lose their jobs. There is a federal law that prohibits employers from firing employees because of a bankruptcy filing. However, bankruptcy negatively affects your credit score, which may make it more difficult to find a new job if you are not already employed.
- Creditors will keep calling even after filing for bankruptcy. Once a person has filed for bankruptcy, it’s illegal for collection agents to contact them any longer.
- Bankruptcy is a way of racking up debt and never having to pay it back. The legal system considers this fraud. Consumers should never make purchases they cannot afford and plan to get out of paying for by declaring bankruptcy.
Read Also Related News
-
19 Nov
Tis the season to spend money we may not have on things we may not need. As the winter holidays approach, many kids are preparing their letters to the North Pole and dreaming of the presents they hope will be under the tree on Christmas...
-
19 May
If you’ve ever had trouble making – and sticking to – a budget, you’re not alone. A recent survey showed that while 92 percent of Americans believe everyone needs a budget to keep their finances in order, only 70 percent are...
-
21 Nov
If you’re trying to plan for your financial future, you are probably trying to balance a few different priorities. Putting money aside for retirement, managing any investments you may have, and paying off debt are just a few of the...
Customer Questions
-
There are special credit cards that allow consolidation of other cards’ debts - the balance transfer credit cards. These cards usually come with a 0% intro APR on balance transfer offer. The zero introductory period varies, but as a rule it is between six months and two years. So you can find a credit card with...
-
The easiest way to find out if you have credit accounts under your name is to request a copy of all your three credit reports: Experian, Equifax, and TransUnion. The reports contain information about active credit accounts, its issuers, and the information about credit accounts balances. If you want to protect yourself...
-
To set a PIN on your credit card, you should call the credit card issuer at the number on the back of your credit card and request your PIN. After that, the issuer will mail to you your PIN. In the meantime, if you need cash, you can go to a bank office and present your credit card and picture ID.
-
The overall process of getting a credit card can take up to 30 business days. To know the status of your credit card applications you should contact the credit card issuer. A quick online search for the bank or credit card issuer's name should turn up a customer service phone number or email address. Banks and credit card...