6 Myths About Personal Bankruptcy and Foreclosure

Written By: Emil FleysherFebruary 24, 2022,

When you have found yourself in a financial dilemma and are faced with bankruptcy and foreclosure, you may be thinking this is the worst thing to ever happen to you. You need to remember not to listen to all the myths about personal bankruptcy and focus on the facts. People from all walks of life get in over their heads sometimes and need a financial reset. If you are facing bankruptcy or foreclosure, you should seek the guidance of a seasoned bankruptcy and foreclosure attorney to help you understand what is happening and how to navigate your way through each process. Here we will debunk six of the most common myths about personal bankruptcy and foreclosure. 

Myth #1: You Will Lose All of Your Property

This may be the most common myth you will hear about personal bankruptcy and foreclosure. In the majority of cases, clients do not lose their property. Often, important assets will be protected from seizure due to the bankruptcy exemptions outlined in the U.S Bankruptcy Code. Our bankruptcy and foreclosure attorney can help you understand this code and how it affects your particular case. 

Myth #2: Your Credit Will Suffer For 10 Years

Many debtors think that their credit will be hurt for at least ten years if they file for bankruptcy. This is not the case. The truth is that Chapter 7 Bankruptcy will stay on your credit report for ten years, but your score will be dependent on what you do after the bankruptcy filing. We have many clients whose credit score exceeds 700 within 6-8 months after their bankruptcy discharge. You can start rebuilding your credit as soon as your case is decided. This can include things like:

  • Secured credit card payments
  • Unsecured credit card payments
  • Car payments
  • Mortgage payments
  • Other credit accounts

Chapter 13 Bankruptcy filings stay on your credit for seven years. You will need to resume car and mortgage payments immediately once your bankruptcy filing is complete. These payments alone will increase your score. 

Myth #3: Both Spouses Will Need to File for Bankruptcy

While many aspects of marriage require both spouses to act together, personal bankruptcy does not. Even if one spouse files for bankruptcy, the other spouse’s credit may not be affected. This is often seen when one spouse enters the marriage with high amounts of debt. Things can get complicated when there are joint accounts, but your bankruptcy attorney will be able to discuss your options. 

Myth #4: You Can be Kicked Out of Your Home

Many homeowners think you will be kicked out of your home immediately after missing a few mortgage payments. The reality is that you will not be evicted right away and there are several steps that need to happen if you miss a couple of payments before you end up in foreclosure. You will be able to stay in the home until the foreclosure process is complete and final. There are certain cases where you may have the ability to stay longer. An experienced attorney can help you stay in your home for as long as possible and will try to do whatever they can to mitigate the situation. 

Myth #5: You Cannot Refinance with Another Lender

When the topic of foreclosure arises, many homeowners will try to refinance to avoid losing their home. However, you do not need to refinance with your current lender and can look at other lenders to see if you can find an affordable alternative. You will need to weigh out all of your options before refinancing to find the best solution for your circumstances. 

Myth #6: Foreclosure Ruins Your Credit Permanently

While a foreclosure can stay on your credit report for seven years, this does not mean that your credit is permanently ruined. It may take some time to prove your creditworthiness after a bankruptcy or foreclosure, but making smart financial decisions moving forward will help. Although it often takes years, depending on the actions taken after a bankruptcy and foreclosure, you can get there and we are here to help.

Schedule an Appointment with The Law Offices Of Emil Fleysher Today

After reading about these myths About personal bankruptcy, you know what is next.

When you are drowning in debt, you should contact the Law Offices of Emil Fleysher, P.A. online or call at 888-886-0020 for bankruptcy and foreclosure options. We are happy to set up a free consultation to go over your financial situation and determine the best way for you to navigate these processes.

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