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Dispelling common myths about bankruptcy

If you find yourself overwhelmed and completely suffocated with medical bills, credit card debt or utility bills you cannot pay, it is easy to feel hopeless, anxious and depressed all the time. The first thing you need to realize is you are not alone when it comes to dealing with debt, and you have options when it comes to a fresh financial start. Bankruptcy laws can be complicated and complex, and it is often tough to admit you need help, but not every fact you have heard about bankruptcy is true. For you to feel comfortable about filing for Chapter 7 or Chapter 13 bankruptcy, we have a few truths for you.

Myth 1: Your possessions will be taken away

Many fear that filing for bankruptcy means they will lose any assets they have, including a house or a car. In Chapter 7 bankruptcy cases, you can set aside exemptions you need to live, and chances are good the creditors probably do not want the others. In Chapter 13 bankruptcy, you can keep everything and the payments are figured into your total repayment plan. You should not fear bankruptcy because you worry you will lose everything you own.

Myth 2: It will be obvious to all your friends that you filed for bankruptcy

You should not feel shame if you have debts you cannot handle. Many pile up because of a lost job, medical bills you did not expect or other things outside of your control. Unless you are a high-profile individual or a large corporation and the media picks up the news, it is likely only your creditors and those you tell will know you filed for bankruptcy.

Myth 3: Your credit will be ruined

Bankruptcy can deal a blow to your credit, but it does not last forever. You may even be surprised by how fast the credit card companies start sending you offers after you have filed. Be careful when these come because they are likely to have very high interest rates, but you should still be able to get a loan if you need a vehicle.

Myth 4: Paying off your debts is better than filing for bankruptcy

If there is no way for you to pay off debts in five years that are more than 50 percent of your income, then bankruptcy may be a valuable option for a fresh financial start and a future that is debt-free.

If you are frustrated and not sure where to turn with debts you have no control over, you may benefit from speaking to an attorney about your options when it comes to bankruptcy.

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