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Common myths about bankruptcy

On Behalf of | Aug 6, 2021 | Bankruptcy

For some New York residents, filing for bankruptcy is a way to a fresh start. For others, it is a situation they want to avoid at all costs. Frequently, this is the case because they have some misconceptions about a law designed to help consumers.

No, bankruptcy will not keep you from buying a car or house in the future

Although it is true that the notation stays on your credit profile for up to 10 years, it will drop off afterward. At that point, your record will look as though you had never filed. Besides that, there are lenders working with consumers who filed for bankruptcy.

No, you probably will not lose your house

Another mistaken belief is the idea that a bankruptcy lawyer cannot help protect your house. With the homestead exemption, you may very well be able to keep your primary residence.

No, bankruptcy is not a one-time deal

Things happen. Consumers have the option of filing for Chapter 7 bankruptcy once every eight years. If you file for Chapter 13, you can generally do so every two years. Therefore, you do not have to wait for a future time to maintain your filing privilege. If now is the right time to get out from under your debt, take the opportunity.

No, you cannot go on a spending binge

It is tempting to max out all your credit cards and take out personal loans right before filing. However, the bankruptcy court considers this fraud. This means that any spending spree you went on leads to exempt debts during the bankruptcy. You have to pay them back.

No, you do not have to file as a married couple

Most married couples commingle their assets. However, if you have not done so, you do not have to file jointly if your spouse cannot keep up with the debts that are only in their name.