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Common myths surrounding personal bankruptcy

When financial strain becomes difficult to endure, many Florida residents consider filing for personal bankruptcy. Unfortunately, a wide range of myths and misconceptions surrounding bankruptcy lead some to postpone filing, while their debt outlook becomes even more dire. Savvy consumers will take the time and make the effort to get to the bottom of these common bankruptcy myths.

One misconception about bankruptcy is that it will mean an end to any chance of securing new lines of credit. This is simply not true. Bankruptcy will result in an immediate ding to one's credit standing, but the damage can be repaired over a relatively short period of time. With the proper degree of attention and effort, individuals who file can purchase a home, car or any other significant acquisition after their bankruptcy is complete.

Another myth surrounding bankruptcy is that filing will cause an individual or family to lose all of their assets. In reality, Chapter 7 and Chapter 13 bankruptcy proceedings allow individuals to restructure their payment plans and keep assets such as homes and vehicles. In addition, filing can stop foreclosure or repossession actions, giving the borrower time to find a solution that will allow for repayment of those obligations. Many forms of unsecured consumer debt, such as medical debt or credit card debt can be eliminated through the discharge process, leaving the borrower better able to keep their house and car.

As with any major financial decision, the best way to choose a course of action is to gain a full understanding of the bankruptcy process. Avoid making decisions based on these and other bankruptcy myths. Take the time to research whether filing for personal bankruptcy is the right path forward for your own unique financial needs. Many other Florida residents have moved through the bankruptcy process and emerged in vastly improved financial standing.

Source: InvestorGuide.com, "Debunking Four Myths of Bankruptcy", Jon Clarke, April 3, 2014

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