Chapter 7 Bankruptcy: Common Misconceptions
Unlike Chapter 13 Bankruptcy, Chapter 7 does not involve filing a payment plan. Instead, the bankruptcy trustee will liquidate any of your non-exempt assets and use the proceeds to pay off your creditors. Due to misconceptions about the liquidation process, many people hesitate to file for Chapter 7 Bankruptcy. Luckily, most of these misconceptions are far from the truth. To clear up any confusion, the bankruptcy attorneys at Groce & DeArmon debunk the most common Chapter 7 Bankruptcy myths.
Myth #1. You Will Lose Your Home
When most people think of Chapter 7 Bankruptcy, they imagine selling off their house to pay off their debts. Although some people will sell their home, this is not the case for everyone. In fact, you can keep your house if you are up-to-date on your mortgage payments or if the equity of your house is protected under the exemption laws for your state. To see if your house falls under these exemption limits, consult a bankruptcy attorney.
Myth #2. Your Credit Will Be Permanently Damaged
Some people believe that filing for Chapter 7 Bankruptcy will permanently damage their credit score. Others believe that their credit score will be better off if they file for Chapter 13 instead. In reality, your credit score will be impacted the same way regardless of how you file. Typically, bankruptcy will appear on your credit report for approximately 10 years. However, this does not mean that you cannot get a loan during this time. After a few years of financial stability, many lenders are willing to work with you.
Myth #3. You will Lose Your Retirement
In a Chapter 7 Bankruptcy case, many assets are protected by exemption laws. This includes some of your retirement assets as well, including your 401k and any IRAs. However, if you recently removed money from your retirement fund to pay off debts, this money will be used to pay off creditors during the liquidation process.
Myth #4. Filing for Chapter 7 Bankruptcy is Too Complicated
Yes, filing for Chapter 7 Bankruptcy is a time-consuming process that requires a large amount of paperwork. This is why it is recommended that you work with an experienced bankruptcy attorney. If you are looking for a bankruptcy attorney, contact Groce & DeArmon today.
Contact Groce & DeArmon
For over 25 years, Groce & DeArmon has provided legal aid in the Springfield, MO area. Specializing in bankruptcy law, we will help you declare bankruptcy, file for either Chapter 7 or Chapter 13 Bankruptcy, and prepare your case for court. Our team of experienced attorneys is prepared to hear about your case and help you get a fresh start. To set up a free consultation, contact us today.