5 Bankruptcy facts you may not know

On Behalf of | Jun 6, 2022 | Bankruptcy |

Residents of New Jersey may want to learn more about filing for bankruptcy. Many think that you lose everything, but that is not the case. In fact, you may eventually end up with an improved credit score.

According to financial advice, there are many myths that surround bankruptcy. You may want to be aware of what they are and the real facts involved.

You won’t lose everything

There are some basics that you can keep when filing Chapter 7. These include your car, home and other assets. Exemptions may vary from state to state. Chapter 13 may allow you to keep assets, but their value will affect repayment.

Relief is not for every debt

Recent taxes, child or family support and debts that are a result of fraud have consideration as personal behavior and may not receive forgiveness. On the other hand, personal loans, credit cards and medical bills may be discharged.

Paying off debts may not be a better option

Although you should think it through, bankruptcy may be the best solution for you. Relief of unwanted stress and a solution to a weighty problem may be the result.

Filing bankruptcy will not cause ruin to your future

After bankruptcy, although it may take a while, you’ll be able to build up your credit score and get on with your life. You may at first be paying higher interest. Data that came from an Equifax study, reported by the Federal Reserve Bank of Philadelphia, showed credit scores of 538.2 when filing happened; however, scores jumped within a few months. After 7 to 10 years, the bankruptcy goes off your credit report.

A secured credit card may help you begin to raise your score. A valuable part is that you have learned much about money management through bankruptcy education.

Bankruptcy filing does not mean you’re failing

Consider it education in financial management. It is not a personal failing but a financial remedy that lifts a burden as well as is a learning experience.

There is a lot of misinformation about bankruptcy out there. It is important to understand the reality of what bankruptcy means for you and your finances.