Bankruptcy is a good option for some people, but they never file because of misinformation they have received from others who do not have legal experience. Instead of continuing to struggle financially, it is important that you learn the truth about bankruptcy and decide based on that, whether or not it is a good option for you. Here are some of the most common myths about it.
You Will Lose Everything
If you are avoiding bankruptcy because you are afraid that you will lose all of your assets, it is time to reconsider the process. You will lose some of your assets. The bankruptcy trustee is charged with valuing your assets and taking possession of some of them to use to pay down your debts. However, you can keep some of your assets with the help of exemptions.
An exemption allows you to keep some of your assets as long as their combined value does not exceed the amount set by law. The amount varies by province, so talk to a lawyer to learn how much of an exemption you have available to you.
You Will Never Qualify for Credit Again
One of the most popular misconceptions about bankruptcy is that once you file, you will never be able to receive credit again. In reality, the bankruptcy stays on your credit file for six or seven years once the process is complete. After that, it will not show on your report.
The six-year period can be used to do things to build your credit. For instance, apply for a secured credit card. If you obtain the card as soon as your bankruptcy is complete, you can show that you have a solid six years of maintaining it. Creditors will look favorably on this when you do apply for credit.
Your Spouse Will Be Hurt By the Bankruptcy
When you file for bankruptcy, your spouse is usually not impacted. In most instances, it is looked at as an individual financial decision. Creditors cannot sue your spouse or take any other legal actions to try and collect money from him or her on your debts. There are some exceptions though. If your spouse co-signed on any of your debts, he or she will still be responsible for paying them off.
For instance, if you and your spouse have a car loan and you file for bankruptcy, you will receive a discharge of the debt and your spouse will have to pay it. Regardless of whether or not the car is driven solely by you, your spouse will be responsible.
For more information, contact Terry Napora Law Office or a similar firm.