Myths And Erroneous Beliefs
What will happen to their assets is one of the primary concerns of potential filers. Most people believe, or have heard, that in bankruptcy they will lose all of their assets. Under certain conditions, certain assets may be eligible for liquidation, but this is not the case for everyone. In reality, these situations are less common than one might believe, and there are numerous methods to avoid asset liquidation. Filing for Chapter 13 can reduce the likelihood that a debtor's assets will be liquidated while making payments through a repayment plan. In almost all bankruptcy cases, exemption laws protect a substantial portion of an individual's personal property and funds from creditors.
People are also concerned with their reputation within the community. Filing for bankruptcy is a matter of public record, but this information is rarely displayed in public. The information is accessible through the courts but is not otherwise made public. Unless the case is considered high profile, entails fraud, or involves an entity of general concern to the public, filing information is rarely released to the media or the general public. In addition, bankruptcy laws prohibit discrimination based on filing status. This means that landlords and employers cannot discriminate against a filer based on their bankruptcy court status.
Another concern after bankruptcy is one's credit score. In reality, bankruptcy itself does not harm credit, but late payments and delinquent account status do. Credit damage is incurred long before a bankruptcy filing. In fact, bankruptcy can enhance a person's credit when delinquent account statuses are removed and debts are considered satisfied. It is not uncommon for a filer's credit score to improve after a bankruptcy discharge. However, bankruptcy can present credit difficulties. Obtaining new credit after bankruptcy may be more challenging than for those without a bankruptcy notice on their credit report. While obtaining new credit can be difficult, it is not impossible. There are numerous creditors who offer credit lines to post-bankruptcy consumers. Finding a decent interest rate and favorable terms or conditions is typically difficult.
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