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Bankruptcy protection extends a valuable lifeline for borrowers struggling to get their finances under control. Unfortunately, many people who could benefit from filing are often scared away by common misunderstandings about the process. Review this guide to debunk these myths and discover how this option can help you. 

What Myths About Bankruptcy Aren’t True?

1. You’ll Lose All Your Property

Chapter 7 bankruptcy allows you to eliminate most types of unsecured debt so that you can start over with a clean slate. In exchange, the trustee has the right to seize some of your belongings to pay creditors.

However, both state and federal law makes some types of property exempt from seizure. In Arizona, you may be able to keep up to $150,000 in home equity, $6,000 in personal property, and even your wedding rings. Many people find that they can get the relief they need without surrendering anything at all.

2. It Ruins Your Credit Forever

bankruptcyMany struggling borrowers are concerned that filing for debt relief means that they’ll never be able to buy a house, finance a car, or open another credit card again. While it does have an immediate impact on your credit, the effect is likely less serious than a long history of missed payments, defaulted debts, and lawsuits.

If you file for Chapter 13 bankruptcy, the information will be removed from your report after 10 years. If filing for Chapter 7, it will take seven years. However, managing your finances and making smart choices can help you rebuild your credit in just a few years. 

3. People Who File Are Irresponsible

No matter how fiscally disciplined you may be, a wide range of situations can leave you unable to meet your obligations. A job loss, medical emergency, or even an unexpected car repair can be enough to wipe out your savings. In these desperate situations, bankruptcy relieves the pressure so that you can start rebuilding your life. 

 

For over 30 years, the team at Knochel Law Offices has helped struggling borrowers get their feet back on solid ground. With offices in Bullhead City and Lake Havasu, AZ, they proudly offer detailed legal advice to clients throughout Mohave and La Paz counties. Visit their website for more information on their comprehensive services, or call (928) 444-1000 to schedule a consultation.

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