Myth #1: Bankruptcy Ruins Your Credit Forever

The negative impact on your credit score diminishes considerably over time. While bankruptcy stays on your report for up to 10 years, per Capital One, its effects on your score decrease monthly as positive payments outweigh the past bankruptcy. With wise credit actions after bankruptcy, your score can rebound within 18 months, states Time Magazine. An attorney who focuses on bankruptcy law can help you rebuild your credit strategically.

Myth #2: You Must Repay All Debts After Bankruptcy

A common myth is that creditors can still legally pursue individuals for unpaid account balances even after a debt has been discharged through bankruptcy. In reality, discharge legally cancels eligible debts, like credit cards, personal loans, and medical bills. Creditors cannot legally continue collections against you for discharged debts. Certain taxes and secured debts like mortgages may still require payment after bankruptcy.

Myth #3: Everyone Will Know You Filed

While your bankruptcy filing does become a public record, it's not published in the local newspaper or spotlighted to the community. Creditors and collection agencies will know to cease contact upon your discharge. However, you don't need to voluntarily disclose a bankruptcy to employers, landlords, schools, or even family unless specifically required, giving you the privacy you may want.

Myth #4: You'll Lose All Your Valuable Assets

The majority of individuals filing for Chapter 7 bankruptcy can keep valuable assets like cars and houses if federal and state exemptions adequately cover the equity value. Any non-exempt assets may be sold to repay eligible debts, though you're typically able to retain most of your owned belongings. Your attorney will help maximize exemptions.

Myth #5: Most Bankruptcies Are Filed by Corporations

According to LegalJobs, 97% of bankruptcies are filed by individuals suffering financial crises, not businesses. The stigma causes misconceptions. In reality, filing for bankruptcy provides a valuable financial fresh start for everyday people truly needing relief from excessive debts they cannot pay. It's not the easy way out or the moral failure it's stereotyped to be.

Counsel from an experienced bankruptcy lawyer dispels myths and clarifies whether bankruptcy is the right solution for your situation. If you think that you may need to file, reach out to a professional at Law Offices Of Rex J Roldan PC who specializes in bankruptcy law to schedule a consultation.