Bankruptcy is one of the most misunderstood areas of the law. If you are considering bankruptcy for your financial situation, you are reasonably stressed and need good information about how a bankruptcy will work for you. Do you believe these myths about bankruptcy?
Myth: A bankruptcy is a failure.
Truth: It can feel as if you have failed to manage your money when you file bankruptcy. The truth is that most people file for bankruptcy because of a divorce, a job loss or devastating illness. In these cases, the bills were just too much for the person’s income. It was not a failure.
Myth: You will lose your home and car.
Truth: It is unlikely. Wisconsin’s bankruptcy exemptions allow you to keep certain items of value. Whether your home and car will be fully covered by the exemptions will depend on the amount of equity you have in these items and the exemptions available. Even if these items are not fully covered by the bankruptcy exemptions, an attorney may still be able to find a way for you to keep them. It makes sense to talk to an attorney to understand all of your options. If you still owe money on your home and car; you might be able to keep the items if you can continue to make payments. You have to look at many different factors in determining whether you can maintain your assets.
Myth: Your financial future is grim after a bankruptcy.
Truth: You probably will have limited credit following your bankruptcy. You may also have to pay higher interest rates for the first few years. The bankruptcy remains on your credit report for seven to 10 years. However, if you make payments on time and continue good habits, your credit score should improve. It will take time, but eventually, you can rebuild.
There is a lot of paperwork to complete before filing for bankruptcy, and you want to make sure you do it correctly. An attorney can help you understand the ins and outs of a bankruptcy and any possible alternatives.