Bankruptcy is a powerful tool the provides relief to borrowers struggling under the weight of unmanageable debt. Unfortunately, widespread misconceptions about debt relief often cause bankruptcy petitioners to make serious mistakes and suffer unnecessary financial stress. Below are three common misunderstandings about bankruptcy law.

3 Common Bankruptcy Myths

1. You’ll Lose All Your Belongings

If you file for Chapter 7 bankruptcy, the trustee may have the right to seize and sell some of your personal possessions. However, each state allows you to exempt a wide range of property, including some home equity, retirement savings, work-related equipment, and jewelry. Many borrowers are able to get debt relief under Chapter 7 without surrendering any property or possessions at all.

2. Bankruptcy Eliminates All Debts

Although bankruptcy law can relieve a wide range of consumer debts, including those associated with mortgages, credit cards, hospital bills, and legal judgments, some obligations are immune from discharge. For instance, student loans can’t be dismissed in a bankruptcy, and some tax obligations are also immune. The trustee may also exempt recent debt-financed purchases if they suspect fraudulent activity.

3. Filing for Bankruptcy Makes You Ineligible for Future Credit

After discharging your debts in bankruptcy, your credit score will likely drop, making it harder to get loans or open new accounts. However, many borrowers are able to get a secured credit card or store-affiliated charge account within a few months and may qualify for an auto loan within a year. With some financial discipline and the help of a skilled attorney, your credit score will eventually rise, perhaps higher than it was before you ran into financial trouble.

If you’re struggling with debts you can’t repay, the attorneys of Lasser Law Office will help you find the path to financial solvency. They’ve been serving clients throughout Tennessee’s Upper Cumberland region for over 20 years, providing personalized attention tailored to your unique needs. Visit their website for more on their bankruptcy law services, or call (931) 372-9988 to schedule a consultation today.