Personal bankruptcy offers a vital lifeline for borrowers struggling with overwhelming debts they can’t repay. Unfortunately, this vital program is the subject of widespread myths and misconceptions, some of which may hold you back from getting the debt relief you desperately need. Below are a few of the most common misunderstandings about the benefits and consequences of this financial decision.

3 Common Myths About Personal Bankruptcy

1. You’ll Lose Everything You Own

In Chapter 7 bankruptcy, the trustee has the right to seize some of your personal assets to pay back creditors. However, each state makes a wide range of property exempt from seizure, so many borrowers can file for bankruptcy protection without surrendering anything at all. In Georgia, for example, borrowers can claim up to $21,000 of the equity in your home, up to $5,000 of the value of your car, and other exemptions. Married couples filing together can double the exemption amounts, allowing you to keep even more of your property.

2. You Won’t Have to Pay for Purchases Made Before Filing Bankruptcy

During a personal bankruptcy, the trustee will carefully examine your medical records to look for signs of fraud or abuse. If you made major purchases on your credit cards in the months before your filing, they will likely exempt those debts from the bankruptcy filing. In extreme cases, they may dismiss your case entirely or accuse you of fraud.

3. Bankruptcy Permanently Ruins Your Credit

While personal bankruptcy does have an immediate and dramatic impact on your credit score, it also provides a platform for rebuilding your financial reputation. In fact, many bankruptcy petitioners are able to begin rebuilding their credit scores within a matter of months, eventually raising it higher than ever before.

For more than 25 years, those in debt throughout northwest Georgia have relied on Brian R. Cahn & Associates, LLC for help gaining a second chance at life. With their in-depth understanding of the personal bankruptcy code, they’ll help identify your options and work to achieve the best possible outcome. Visit their website for more on their bankruptcy services, follow their Facebook for tips and advice, or call (770) 382-8900 to schedule a consultation.