Bankruptcy is a powerful tool for debt relief. It can provide a fresh start for people who have been living with the burden and stress of debt for years, and allow them to finally move forward. Unfortunately, there are many myths and misconceptions about bankruptcy that can scare people off before they learn about its benefits. When you work with an experienced bankruptcy attorney in Jacksonville, they can help you pick the right option that will have the best impact on your financial future.
Some Common Misconceptions About Bankruptcy
Misconception 1: You’ll Lose Everything
Filing for bankruptcy does not mean you will have to give up your possessions. In fact, you may be able to keep most of them. When you file Chapter 7 bankruptcy, if you don’t own any non-exempt property, you will be able to keep everything. This is called a “no asset” Chapter 7, and it means you, as the debtor, will not give up any possessions. In Florida, the equity in your primary residence, motor vehicle (up to $1000), prepaid college education trust deposits, wages, pensions, public benefits, and alimony/child support are all exempt.
In a Chapter 13 bankruptcy, you will be able to keep all of your assets. However, the value of your assets will be calculated and factor into how much of your unsecured debts you have to pay back through your repayment plan.
Misconception 2: Your Credit Will Be Ruined
While your credit may take a hit when you first file bankruptcy, it is not permanent. If you keep up with your payments, your credit will improve. Scores usually improve within about six months.
Misconception 2: All of Your Debts Will Be Cleared
Bankruptcy can be a great way to eliminate debt, but it can’t always eliminate all of your debt. These can include recent tax liability, alimony, and any debts resulting from fraud. Student loans are also unlikely to be forgiven. Debts that are more likely to be forgiven are often things like personal loans or medical bills. An experienced bankruptcy attorney can help you determine which debts can be eliminated.
What will Happen If You File Bankruptcy?
The most immediate effect you’ll see is that all creditors will stop any form of contact. Also, your credit score is likely to improve as you begin paying back secured debts. You will be required to attend the First Meeting of Creditors. This is a short hearing where you meet with the trustee in your case. It usually lasts between 5 to 10 minutes. In Chapter 7 cases, this might be the only one you have to attend. If you file Chapter 13, the main difference will be repayment. You will be charged with repayment for 3 to 5 years, but any remaining debts will be discharged.
Contact The Bankruptcy Experts to Get a New Start
Filing for bankruptcy is not the end of the world. It is actually one of the best ways to reset your financial standing and rebuild your credit. Contact the experienced bankruptcy experts at Parker & DuFresne for a free consultation today.