It is normal for you to be hesitant about filing for bankruptcy due to misinformation and social stigma. However, if you have determined Chapter 7 is right for you, there is no need to fear the process or the consequences. In fact, delaying will only hurt your case.
It is better to have a clear understanding about bankruptcy so you can have more confidence and less stress and avoid making mistakes. If you believe these three myths about Chapter 7, forget them and learn the truth instead so you can begin your bankruptcy case on the right foot.
1. Chapter 7 bankruptcy results in the loss of all assets
While you may lose some assets, you will not lose all of them. There are many exemptions in Florida, including:
- Pension plans
- Home equity (or $400 if not a homeowner)
- $1,000 maximum of car equity
- $1,000 maximum of personal property
- Earned income tax credit
- $750 weekly maximum in wages
There may be more you qualify for, so speak to a bankruptcy attorney to determine what they may be.
2. Chapter 7 bankruptcy erases all debt
Unfortunately, some debts you will continue to have responsibility for no matter what, such as child support and taxes. The court will not discharge any credit cards you run up immediately prior to filing for bankruptcy either. You also must factor in court fees and legal expenses.
3. Chapter 7 bankruptcy ruins your credit score
There is good news: the damage to your credit is only temporary and will not affect your financial standing long into the future. You can quickly rebuild your credit with smart choices, such as paying bills on time and following a realistic budget. The steps you take before you file also influence how fast you can raise your credit score back up, which is why it is important to include a bankruptcy lawyer in the process who can help you make the best decisions for your situation.