Individuals who file for bankruptcy have the opportunity to free themselves from the burden of overwhelming debt. But the bankruptcy process is one rife with myths and misconceptions, which can prevent people from truly exploring this viable option. To help better understand the process, here are a few common bankruptcy myths to look out for.

Debunking Common Bankruptcy Myths

1. Bankruptcy Means Losing Everything

Chapter 7 bankruptcy liquidates your assets to repay your creditors. But don't let that explanation deter you from filing. There are certain essential possessions you can list as exemptions, and, in many cases, the courts will allow you to retain these items when you file for bankruptcy. In Chapter 13 bankruptcy, which doesn't eliminate debt but reorganizes it, you usually keep all your assets and repay what you owe over a longer period of time.

2. Bankruptcy Means You Will Never Be Approved for Credit

In the immediate days and weeks following a bankruptcy filing, it may be difficult to establish credit. But this is by no means permanent, and most filers are able to open new lines of credit within the first few months of bankruptcy. From a creditor's perspective, you now have fewer debts, so there is minimal risk. Getting approved for credit cards and car loans will help you rebuild your credit; just be careful about high finance charges and interest rates.

3. Bankruptcy Means All Your Debts Will Disappear

Unfortunately, bankruptcy will not erase every type of debt. In Chapter 7, certain unsecured debts like student loans, back child support payments, alimony, and tax liens, will remain. Chapter 13 may be able to lower debts as part of the reorganization process, but it will not eliminate them entirely. Keep in mind that bankruptcy offers a cleaner financial slate from which to start again, so with lower overall debt or a more manageable monthly payment schedule in place, existing debts are easier to tackle and pay off.

If you're considering filing for bankruptcy, an attorney will clear up any misconceptions and ensure you understand the process. William C. Rieth has more than 25 years of experience helping Monroe County, NY, residents file for bankruptcy. He works with both individuals and business owners to resolve financial difficulties and find lasting debt relief. Call (585) 232-6520 or visit his website to learn more about how he can help you file for bankruptcy.