Declaring bankruptcy can be a viable way to regain your financial footing, but there are some drawbacks to discharging debt by filing. Unfortunately, these drawbacks are to blame for some of the most common myths regarding the bankruptcy. For example, many believe that declaring bankruptcy will destroy your credit. While your score will take a hit, it’s possible to recover — and even qualify for certain kinds of financing — in a matter of months. Here are three other misconceptions that bankruptcy attorneys and other financial experts are working to dispel.

The Truth Behind Popular Bankruptcy Myths

1. You Will Lose All Your Property 

If you file for chapter 13, which essentially reorganizes applicable debts into a more manageable three-to-five-year payment plan, you will get to retain all your property. While it is true that you could lose some asserts by filing chapter 7, on the other hand, you will be able to keep most of your property. Only nonexempt assets will be vulnerable to liquidation. Examples include vacation homes, new vehicles with equity, valuable collections, jewelry, and expensive clothing items. A bankruptcy attorney can guide you through this process and help you minimize property losses wherever possible.

2. You Will Be Able to Discharge All Your Debt

Some people carelessly rack up debt because they assume they can discharge it all at some point — by declaring bankruptcy, for instance. However, bankruptcy attorneys will warn you that certain debts cannot typically be discharged, even through bankruptcy. Nondischargeable debts include student loans, tax obligations, child support payments, alimony payments, and criminal restitution.

3. You Will Never Be Able to Buy a House 

In general, you should expect your credit score to drop considerably after filing for bankruptcy. Fortunately, you can take steps immediately to start improving your creditworthiness. A seasoned bankruptcy attorney will be able to suggest some quick ways to improve your credit. Even though the bankruptcy will be reported for seven to ten years, you may be eligible to apply for certain types of mortgages in as little as two years. 

If you want to discuss your financial situation with a seasoned lawyer in Connecticut, turn to Mark O. Grater Attorney at Law. Practicing out of Groton, this bankruptcy attorney has been in the legal field for more than three decades. His firm also assists with personal injury suits, workers’ compensation claims, estate planning, and criminal defense. To request an initial consultation, visit his website or call (860) 449-8059.