Bust The Myths Before You Take The Bankruptcy Ride

If you look at recent reports, then a remarkably alarming trend of the rising number of bankruptcy cases come to light. There has been a constant rise in the number of bankruptcy filings since the 1990s itself. In fact, a recent study shows that approximately 130,000 people are filing for bankruptcy every year in the United Kingdom. Now, the general impression that comes across with so many people filing bankruptcy is that bankruptcy must be a fairly easy process. However, this is a myth and there are some major concerns to be kept in mind when filing for bankruptcy. This is essentially because bankruptcy is literally the last resort to get yourself out of the clutches of debt, plus the bankruptcy laws are known to frequently change.

You lose all your assets

One of the basic myths associated with bankruptcy is that if you file bankruptcy, then it will cause you to lose your assets. However, here are certain facts you should know. This fact of losing your assets is only applicable in certain cases of bankruptcy. Generally, filing for bankruptcy puts a stay on all the debt collections. This basically goes on to mean that your creditors can not really go ahead and seize your property immediately. In fact in the cases of liquidation too, the law allows for the debtor to keep at least a small portion of the property.

Bankruptcy is the ultimate solution

Many make the mistake of considering bankruptcy to be the ultimate solution that will completely eliminate all financial woes. However, this is a myth. The reason being, there are certain requirements involved when it comes to filing bankruptcy. For instance, you can not just go ahead and file bankruptcy any and every time you get stuck in debt. Most importantly, when it comes to filing bankruptcy you need to show that you have tried all other means of obtaining financial relief, like say credit counseling, consolidation, other loans and likewise. Hence, bankruptcy is always the last resort.

Your credit is negatively affected

This is something that is definitely true to a great extent. Bankruptcy does, after all, have a negative impact on your credit report for quite a few years. This is the maximum time period till which it’ll stay in your credit report. Now, this definitely proves to be a deterrent when you are looking for loans in future. Nevertheless, filing bankruptcy also has a positive impact given the fact that you get a clean slate to start with. There are chances that creditors would be willing to provide you with credit, as they know that you will not be able to file bankruptcy again for at least quite a few years.

The filing process is easy

This is a myth to a great extent, even though you can actually sit at home and file bankruptcy online. In fact, bankruptcy forms are also available at any court house. However, no matter what it’s never a good idea to file bankruptcy without the aid of a lawyer. This is essential because with the ever changing bankruptcy laws, you are not well equipped to handle the filing procedures by yourself.

It is important that you keep in mind the above facts when considering the idea of filing bankruptcy. There is no point in going for it by believing in the wrong notions. Do your homework and find out the reality before you go ahead and take any conclusive step.

Andy Gorton is the author and editor of the Bankruptcy Clinic

Andy Gorton – who has written posts on Bankruptcy Clinic Blog.

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