Many misconceptions and myths surrounding Chapter 13 bankruptcy can lead individuals to make uninformed decisions about their financial future. In this blog post, we will explore some of the most common myths about Chapter 13 Bankruptcy in Orlando
We will also provide the truth behind them so you do not fall for these misconceptions.
Myth 1: Chapter 13 bankruptcy will ruin your credit score.
Filing for bankruptcy will indeed harm your credit score in the short term. However, it’s important to remember that most individuals who file for Chapter 13 bankruptcy are already struggling with significant financial problems and have poor credit scores. By filing for Chapter 13, they are taking steps to get out of debt and regain control of their finances. Over time, as the individual makes payments under the court-approved plan, their credit score can improve.
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Myth 2: You will lose all your assets if you file for Chapter 13 bankruptcy.
This is not true. Under a Chapter 13 bankruptcy, the individual is allowed to keep their assets and continue operating their business. Instead of selling assets to pay off creditors, the debtor proposes a reorganization plan to the court, which outlines how they plan to pay off their debts over time. Certain assets, such as primary residence and personal belongings, may be protected under state or federal exemptions.
Myth 3: Chapter 13 bankruptcy is only for people who are behind on their mortgage payments.
While it is true that Chapter 13 bankruptcy can help individuals behind on their mortgage payments, it is not limited to just those individuals. Chapter 13 bankruptcy can also benefit from higher unsecured debt, including credit card debt or medical bills, that they cannot repay. By filing for Chapter 13, these individuals can propose a plan to pay off their debts over three to five years and get back on track financially.
Myth 4: Once you file for Chapter 13 bankruptcy, you can never file for it again.
This is not true. While there are certain restrictions on the number of times an individual can file for bankruptcy, it is possible to file for Chapter 13 bankruptcy again after a certain period. The exact time frame depends on the individual’s circumstances and the reason for their previous bankruptcy filing. However, consulting with an experienced lawyer who can help you evaluate your options and make an informed decision is always recommended.
