While most people have heard of bankruptcy, they may not have delved into more detail unless facing financial hardship. Before taking any concrete steps, it’s important to be armed with accurate information.
There are numerous misconceptions about bankruptcy, and it’s vital to debunk these. Outlined below are two of the more common misconceptions.
1. You will definitely lose your home
People often refrain from filing for bankruptcy or even finding out more due to the fear of losing their homes. However, California has exemption laws that protect the homestead during bankruptcy.
California 704 homestead exemption protects an individual’s primary residence from creditors. The property can be a boat, mobile home, community apartment or condominium up to the value of $600,000. However, this area of the law is nuanced, so it’s important to seek appropriate legal guidance.
2. Bankruptcy indicates failure
There are many negative stereotypes surrounding bankruptcy. One of them is that filing indicates failing in life. However, when looking at the most common causes of bankruptcy, this myth can soon be debunked.
Some common causes of bankruptcy include:
- Family issues like divorce
- Medical costs for chronic illnesses
- Unexpected loss of employment
Some of the most successful entrepreneurs on earth have filed for bankruptcy at some point. It is not an indication of failure, rather, it usually shows that someone has had misfortunes.
These are just two of many myths and controversies surrounding bankruptcy. When you have as much accurate information as possible, you can come up with a plan to get your finances back on track.