California citizens who are over their heads in debt may have considered filing for bankruptcy. Unfortunately, there’s a lot of misinformation out there regarding the topic of bankruptcy. By understanding some of these common myths, you can better determine whether bankruptcy is actually the right choice for your financial situation.
Filing for bankruptcy means you’re a failure
Filing for Chapter 11 or another type of bankruptcy doesn’t mean that you’re a failure. In most instances, people who end up filing for bankruptcy do so because of factors that are outside of their control. Some of the most common factors include job loss, divorce and crushing medical debt. It’s important to think of bankruptcy from a different perspective to see it as a valid option for a fresh start and not an embarrassing last resort.
You’ll lose all of your property
One big myth about bankruptcy is that you’ll be losing all of your assets. This is not actually the case. When you file for personal bankruptcy, you’ll be able to keep certain assets that you use for living. These include things like your home and your furniture. These are referred to legally as exemptions, and most people have them when they file for bankruptcy. In fact, less than 5% of bankruptcy cases actually require people to give up their property.
All your debts will be forgiven
This is one big misconception. While filing for bankruptcy can help to reduce the amount of debt that you have, it will not eliminate all of it. Some of the most common debts that are very hard to get discharged through bankruptcy are alimony, child support, income taxes and student loans.
If you’re financially in debt and don’t see a way out, you may want to consider filing for bankruptcy. Many people wait to do so because they have too many misconceptions about what happens. The best thing to do is contact an attorney for help answering your specific questions regarding the bankruptcy process.