Common misconceptions about bankruptcy

While many individuals seek to save money where possible, budget effectively and build a significant emergency fund, others are not so fortunate in their financial circumstances. Whether as a result of the significant rises in unemployment or the poor state of the property market, some individuals are experiencing considerable financial difficulty.

Debt has an inherent aspect of stigma attached to it so it is understandable many do not want to seek help especially if they feel bankruptcy is the only solution suitable. So what are the biggest misconceptions about the most stigmatised area of personal finances? Let’s explore it today since bankruptcy is such a seldom talked about topic.

Bankruptcy will result in losing your home

Whether filing for bankruptcy, there is little likelihood of a property being sold to recoup debts owed to an individual’s creditors. In a typical agreement, providing the house repayments are maintained and met on time, a property is not seized in order to cover your debts written off by bankruptcy. However, this can be enforced through an affirmation of the debt with your creditor.

You will be fired for filing for bankruptcy

Not only is it unethical for an individual’s boss to fire their employee as a consequence of filing for bankruptcy, an individual’s job is also protected by federal legislation. While potential employers are permitted to look at your credit file, which will document any insolvency, they cannot discriminate against an individual on these financial grounds.

Bankruptcy will clear all of your debts

While insolvency will eliminate the majority of debts that an individual may owe, there are debts that are exempted from bankruptcies. Amongst these, the most common debts that an individual will still be eligible to repay are student loans and any debts accrued as a result of cases of fraud. There are particular caveats to instances of student loans and, as such, it is always best to consult a professional, independent company.

Bankruptcy will prevent you getting further credit

This is not necessarily the case, but many individuals believe this to be true as a result of the reluctance of many major financial institutions to accept applications. Whilst there are many factors involved in a company’s decision to provide financial products to an individual having been declared bankrupt, such as time elapsed and their current credit score, the most crucial thing to remember is to be resilient. Quite often, persistence will pay off.

Bankruptcy will isolate you

Filing for bankruptcy can prove to be a cathartic process for many individuals following the concern over money and likely creditor harassment experienced in instances of serious debt. Once insolvency is decided upon as a course of action, an individual is supported in their application by professional debt advisors. These people will not only help to resolve the situation of debt but also aid in altering attitudes towards money so as to ensure a healthy relationship with finance in the future.