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Common Consumer Bankruptcy Myths

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Whether you were considering personal bankruptcy prior to the start of the COVID-19 pandemic or you are in the early stages of considering consumer bankruptcy as an option, it is important to know that there is a lot of misinformation about consumer bankruptcy on the internet and coming from family, friends, co-workers, and acquaintances. In short, it is critical to consider who your sources are, and to keep in mind that even someone who has gone through a Chapter 7 bankruptcy or Chapter 13 bankruptcy case might not have all of the information you need, and might perpetuate some of the myths that often circulate about the consumer bankruptcy process.

In sum, you should trust experienced Orlando bankruptcy attorneys when it comes to questions and concerns you have about the bankruptcy process and the U.S. Bankruptcy Code. If you are considering bankruptcy, you should reach out to a lawyer who can help. In the meantime, we want to tell you about some of the most common personal bankruptcy myths.

You Will Lose All of Your Possessions 

This simply is not true. Whether you file for bankruptcy in Florida or elsewhere in the country, you will be able to rely on bankruptcy exemptions in order to exempt certain assets from your bankruptcy case. If you are filing for Chapter 7 bankruptcy, it will be necessary to liquidate some or many assets depending upon your exempt property, but you will never lose retirement benefits, pensions, and a certain amount of equity in your other assets to be exempted. To be clear, you will not lose all of your possessions.

You Will Lose Your Home 

This is a common myth that is completely untrue. Whether you are filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will not lose your home. Florida has one of the most generous homestead exemptions for debtors, permitted debtors to exempt all equity in their home. As such, none of the equity in your home will ever need to be liquidated in a Chapter 7 case. And when it comes to Chapter 13 bankruptcy, you should know that many people actually file for Chapter 13 bankruptcy expressly to prevent or stop a foreclosure and to remain in their homes. The automatic stay in a consumer bankruptcy case prevents a foreclosure from moving forward, and a Chapter 13 reorganization plan allows a debtor to catch up on mortgage payments.

You Will Never Be Eligible for a Credit Card Again 

It can take a little bit of time to rebuild your credit, but often within even a few months after your bankruptcy case, you can apply for a secured credit card. Once you work on rebuilding your credit a bit more, you can be eligible for unsecured credit cards and other lines of credit. And similar to credit cards and other lines of credit, many people who file for bankruptcy become eligible once again for mortgages, and many buy homes after rebuilding their credit after a consumer bankruptcy case.

Contact an Orlando Bankruptcy Lawyer 

Do you have questions or concerns about filing for personal bankruptcy? One of our experienced Orlando bankruptcy lawyers can assist you. Contact Anderson & Ferrin to learn more about how we can help.

Resource:

law.cornell.edu/uscode/text/11

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