Managing an insurmountable amount of debt can be nerve-wracking. Yet, the prospect of filing for bankruptcy may leave you anxious about how bankruptcy could affect you both now and in the future.
The decision to file for Chapter 7 or Chapter 13 bankruptcy in Kentucky is certainly not one to take lightly. However, because of the misinformation surrounding bankruptcy, it can be helpful to sort out the facts from fiction.
Below are five bankruptcy myths or misconceptions, dispelled:
You can only file for bankruptcy once
Just because you already filed for bankruptcy does not render you ineligible to file ever again. For those filing Chapter 7 bankruptcy, you must wait eight years before filing again. For those filing Chapter 13 bankruptcy, you must wait two years until filing again.
Everyone will know you filed for bankruptcy
Personal finance is a topic that many wish to keep private. The prospect of family members, friends, colleagues or more finding out about your financial woes can be frightening. However, while bankruptcy filings are made public, the chances of others discovering your bankruptcy are slim as local news outlets rarely publish such details.
You will have to repay everything
Both Chapter 7 and Chapter 13 bankruptcy will relieve you from much of your debts. This can mean that you can discharge much of your debt accumulated from credit cards, medical bills, personal loans and more. However, there are some items that bankruptcy cannot discharge, including student loan debt, child support payments, taxes and more.
You will lose all your possessions
Many fear losing their home, car or other prized possessions after filing for bankruptcy. However, in some cases, filing for bankruptcy can even protect your home from foreclosure or your car from repossession. Additionally, Kentucky exemptions allow you to protect certain possessions, including furniture, tools, clothing and more.
Your credit will be permanently ruined
Bankruptcy certainly can take a toll on your credit report. While Chapter 13 bankruptcy stays on your report for seven years, Chapter 7 bankruptcy stays on the report for ten.
However, you can begin to take steps to improve your credit score immediately after you file for bankruptcy. NerdWallet recommends obtaining a secured credit card or secured personal loan to restore your credit in a safe manner. By taking things slowly and carefully, you can begin to make small steps toward improving your score.