Some Colorado residents might find that they need to file for bankruptcy if they have massive debt they can’t immediately pay off. While there is a stigma regarding bankruptcy, it’s important to know the myths about filing.
Filing for bankruptcy means you’ll lose your home
This is a common bankruptcy myth. However, you will keep your home when you file. If your file for Chapter 13 bankruptcy, you might even be able to improve your mortgage payments as they are rearranged with the filing.
I won’t be able to qualify for new credit after bankruptcy
Many people who file for bankruptcy worry that they won’t be approved for new credit cards or loans afterward. However, there are certain companies that specifically aim to help individuals who have filed for bankruptcy to get back on their feet and rebuild their credit.
All of your debts are forgiven in bankruptcy
You are able to discharge most unsecured debts such as credit card debt, medical bills, personal loans and utility bills if you file for Chapter 7 bankruptcy. However, you cannot discharge secured debts such as alimony or child support.
Both spouses in a married couple must file
People who are married don’t necessarily have to file for bankruptcy just because their spouse has filed. If one spouse has debt that’s in their name only, the other is not responsible for it and does not have to file bankruptcy. Only when the debt is shared between the spouses do both have to file.
Your credit score will never recover after bankruptcy
It’s a common misconception to believe that if you file bankruptcy, your credit score will never recover. However, the reality is that after filing, you can work on repairing your credit. You can apply for a new, secured credit card that works with a deposit of your money and starts with a low credit limit. Gradually, your credit will improve and you can work your way up to a higher limit and an unsecured card.