Busting The Biggest Bankruptcy Myths
COVID-19 has hurt businesses and taken the livelihoods of too many people in Orlando, and throughout the entire state, over the past two years. It is no surprise then, that many Floridians are starting to consider bankruptcy as a way to eliminate their debt and get a fresh start.
Still, there are a lot of people that remain reluctant to file for bankruptcy and often, that is because they believe some of the biggest myths that are out there. In many cases, there is no truth behind these myths and so, people put off filing for bankruptcy, or refuse to do it altogether. For this reason, our Orlando bankruptcy lawyer has compiled the biggest myths we have heard over the years, as well as the truth behind them.
I Will Lose All of My Assets if I Declare Bankruptcy
Article 1 of the United States Constitution allows the federal government to enact federal law throughout the entire country. However, it does not have to. The federal government can choose to allow states to make their own laws, and it has done this with bankruptcy. One of the bankruptcy laws that states can change on their own is the exemption law. Florida allows for many exceptions and they include:
- Homestead: Regardless of a home’s value, it is exempt from the bankruptcy laws. The only exception to this is if the home has been paid in full in the past 1,215 days. When that is the case, approximately $160,000 of the equity within the home is exempt.
- Automobile: You can exempt $1,000 of the equity in your vehicle.
- Personal property: You can exempt $1,000 in tangible and intangible property if you own a home and up to $5,000 if you do not own your home.
- Retirement accounts: You can exempt up to $1,000,000 in retirement accounts.
The above are just a few of the exceptions allowed under Florida bankruptcy law, meaning you will not lose those assets, even if you file Chapter 7 bankruptcy.
Bankruptcy Will Ruin My Credit
It is true that a bankruptcy will lower your credit score. If you file Chapter 7 bankruptcy, it will remain on your credit report for ten years. If you file Chapter 13 bankruptcy, it will stay on your credit report for seven years. Still, if you are considering bankruptcy, your credit score has likely already taken a hit. Also, filing bankruptcy will provide you with a fresh start so you can start to rebuild your credit.
Bankruptcy Will Ruin My Reputation
It is true that previously, bankruptcy could ruin a person’s reputation because filings are a matter of public record. In 2005 though, there was a boom in bankruptcy filings and after the great recession in 2008, people from all walks of life have filed bankruptcy. It does not come with the shame and embarrassment it once did.
Call Our Bankruptcy Lawyer in Orlando Today
Bankruptcy has many benefits and at Anderson & Ferrin, P.A., our Orlando bankruptcy lawyer can explain what those are while dispelling the many myths associated with the process. Call us today at 407-412-7041 or call us online to schedule a free consultation and to learn more about how we can help.