For a lot of people, bankruptcy is a dirty word. That’s because there’s a lot of misinformation and misconceptions about bankruptcy. Today, let’s go over some of the most common fictions and talk about the facts.
Fiction: If I file bankruptcy, I will never buy a house or get a mortgage.
Facts: Bankruptcy can actually help you qualify for a mortgage and buy a house. If you are having trouble saving for a down payment because you are paying your debts, bankruptcy can help you save and afford a mortgage payment. Two years after getting a Chapter 7 bankruptcy discharge you can qualify for government-backed mortgages such as FHA, VA, or USDA loans. You can also get a government-backed mortgage during a Chapter 13 bankruptcy after one year. FHA loans are great for first-time homebuyers as you can pay as little as 3.5% down and have a credit score as low as 500. Bankruptcy can help you resolve your debts so that you can afford to buy a home and start building wealth.
Fiction: If I file bankruptcy, I’m going to lose all of my property.
Facts: The chances of losing any property in a bankruptcy are extremely low. In over 95% of Chapter 7 bankruptcies no property is lost. In a Chapter 13 bankruptcy you keep all of the property you want to keep. If you are at risk of losing property in a Chapter 7 bankruptcy, it often makes sense to file a Chapter 13 bankruptcy.
Fiction: I can’t file bankruptcy on medical debts.
Facts: Bankruptcy can cover just about every kind of debt, including medical debts. If you are stuck paying medical bills you can’t afford, bankruptcy can offer relief. Even if you have been sued over medical bills, bankruptcy can stop collection actions and wipe out medical debt.
Fiction: If I file bankruptcy, I won’t be able to rent a new apartment.
Facts: There is no rule that you cannot rent an apartment after a bankruptcy. Many landlords will rent to someone after a bankruptcy and even during a bankruptcy.
Fiction: Bankruptcy can’t help with student loans.
Facts: While most types of student loans aren’t dischargeable in a bankruptcy, bankruptcy can still help. Bankruptcy can help you put your student loans on pause, and can also help you resolve other debts and free up money to tackle your student loans. Even better, if you can prove that repaying your student loans would create an undue hardship, you can seek to get your student loans discharged in the bankruptcy.
Fiction: I can make the minimum payments on all my debts, so I don’t need bankruptcy.
Facts: If you are only able to make the minimum payments on your debts, you may just be stuck in a hamster wheel. Making the minimum payment on debts means it may take years and thousands of dollars of interest to be free. Even if you can make the minimum payments, are you saving enough for retirement or for an emergency? If the answer is no, bankruptcy may be a good option. It will put you in a position to pay what you can toward your debts and free up money for your future.
Fiction: If I file bankruptcy, my life will be ruined.
Facts: So many of our clients tell us that they feel a huge sense of relief when they file bankruptcy. If you’ve been living under the weight of your debts for years, you’ll be amazed to see what it’s like to not have to worry anymore. Bankruptcy means an end to collection calls, bills in the mail, and sleepless nights.
Fiction: A bankruptcy attorney is going to pressure me into filing a bankruptcy.
Facts: At the Sader Law Firm, we pride ourselves on giving honest information to people who call us. If a bankruptcy doesn’t make sense in your situation or if there is a better alternative, we will tell you. You won’t get a hard sell from us — just the facts about your options.
If you want to learn the facts about bankruptcy and whether it may be right for you, call Sader Law Firm at (816) 561-1818 for a free consultation.