Bankruptcy gets a very bad rap in Alabama. If you are struggling to pay your bills and drowning in debt, you could be reluctant to apply based on myths, however. For that reason, let’s look at some common misconceptions about bankruptcy that you should stop believing.
Creditors can take your house and car
Yes, this happens, but not always. If you are filing for Chapter 7, you can keep your home and your car if you were current on your monthly payments before and plan to do so after filing for bankruptcy. Besides that, bankruptcy also allows you to exempt some equity on your property, like your home or car.
Chapter 13 bankruptcy focuses on reorganization rather than liquidation. The bankruptcy court will dwell more on your repayment plan to your creditors, giving you a chance to restructure your business to make profits that can pay back your debts. But, if you like, you can still sell your house and car to relieve your debts.
I won’t qualify
Almost anyone can qualify for bankruptcy in Alabama. In fact, 99% of people that apply for bankruptcy with experienced lawyers qualify and relive their debts, getting a chance to start a new. Therefore, as long as you have debts and find it hard to pay your bills, there is an option for you regardless of your situation.
I may never borrow money again
It’s true that bankruptcy reduces your credit score, and it can stay on your public creditor report for a maximum of ten years. But, this doesn’t mean you won’t be able to borrow money again. Although, lenders may charge you higher interest rates immediately after filing.
Bankruptcy can’t stop a legal action once started
One of the advantages of applying for bankruptcy is the element known as the automatic stay. It instantly stops creditors from constantly calling you, proceeding with foreclosure, lawsuits, and garnishments. This stay can last up to 5 years for Chapter 13 or 3-5 months for Chapter 7.
Most myths about bankruptcy were created by people that try to discourage others from filing for it. Bankruptcy can help you a great deal if you know what you are doing. Besides, there is nothing better than having a clean slate after financial turmoil.