There is a lot of misinformation that gets passed around about bankruptcy. Are you falling for any of the myths that are out there?
Today, we are going to be putting your knowledge to the test with a quick true or false quiz. Even if you fail the quiz, you will end up gaining important facts.
True or False: Filing for bankruptcy will ruin your credit forever.
- Answer: False. While filing for bankruptcy can cause your credit to take a hit temporarily, it does not stay on your credit report forever. In fact, many people are able to rebuild strong credit within a few years of filing.
True or False: You lose everything you own by filing Chapter 7 bankruptcy.
- Answer: False. While Chapter 7 bankruptcy is also known as bankruptcy liquidation, so many assets are exempt from liquidation that you could end up keeping nearly everything you own after filing, including your home, car, retirement assets and personal property.
True or False: The law change in 2005 made it almost impossible to file for bankruptcy.
- Answer: False. While the bankruptcy reform of 2005 made it slightly more expensive and cumbersome to file for bankruptcy, people who need it are still able to file in most situations. Although, having an experienced attorney help you through the process is more important than ever.
True or False: There is more than one option for filing for personal bankruptcy.
- Answer: True. Chapter 7 and Chapter 13 are both available to individuals and families. Chapter 7 is for people who do not earn significant income. The process involves liquidation and a complete discharge of most debts. Chapter 13 is available to those who do not qualify for Chapter 7 and the process involves repaying your debts a period of three to five years, often at a reduced amount.
You can learn more about the differences between the two options here.
True or False: Americans have a legal right to file for bankruptcy protection.
- Answer: True. Americans are granted the legal and statutory right to file for bankruptcy protection. In many cases, people are buried in serious debt because of factors far beyond their control such as health problems, job loss or plain old bad luck. Every American in this situation has the right to ask for a fresh start and receive one.
Would you like to learn even more about bankruptcy law? Keep reading.