“Did you hear about your cousin in Chicago? He just filed for Chapter 7 bankruptcy.” What goes through your mind when you hear this? The word “bankruptcy” probably immediately fills you with worry. Where will your cousin live? What will happen to his belongings? What does “Chapter 7” even mean?
For most of us, bankruptcy is a big, scary concept. It’s probably not a word that gets tossed around much in everyday conversation unless there are financial issues impacting our lives or if we’re obsessive Monopoly players. When we do use it, we tend to associate it with bad things. Like many things in life, the meanings we assign to bankruptcy are rooted in some truth and a whole lot of exaggeration.
Unless you’re a bankruptcy lawyer it is likely that you don’t have a good sense of what is truth and what is exaggerated. That’s okay. However, it helps to get a more accurate idea of what bankruptcy means, especially if you or someone you know is facing a bankruptcy. Here are five common misconceptions about bankruptcy and what the reality actually is.
I will lose everything I own! In most cases, you won’t lose anything. Bankruptcy laws vary from state to state, but most have provisions intact that protect assets like your house, your car, and other possessions.
Everyone will find out that I have filed for bankruptcy. This is extremely unlikely unless you are a prominent figure in the public or a corporation. There are simply too many bankruptcies being filed, especially since the recession, for this to be the case.
I’ll never be able to get credit again! You will be getting credit card offers within a few months of filing bankruptcy, and you’ll even qualify for loans. However, they will likely charge exorbitant interest rates and should be used carefully to avoid financial setbacks.
My credit rating will improve after I file bankruptcy. Yes and no. A bankruptcy can stay on your financial record for up to ten years (usually less) which doesn’t look great to creditors. However, this does not mean that you cannot repair your credit by being diligent. If you play your cards right over time, there is nothing stopping you from acquiring a higher credit rating than the one you started out with.
All of my debts will be erased. Sorry, not happening. A Chapter 7 bankruptcy will wipe out unsecured debt, like medical bills or credit card debt. It will not, however, eliminate other types of debt, for instance child support, federal student loans, or alimony.
Chapter 7 Bankruptcy Chicago - If you’re struggling under the weight of overwhelming debt, Chapter 7 bankruptcy in Chicago may be your best option. Contact Chicago Debt Solutions if you’re under threat of garnishment, loss of your home or vehicles, or are being harassed by creditors. Contact our bankruptcy experts at chicagodebtsolutions.com or call 312.445.9106 for compassionate representation during such a difficult and frightening time.