The legal process of bankruptcy is intended to assist individuals and businesses in obtaining a new financial beginning. However, there are many common myths and misconceptions about bankruptcy that can prevent people from seeking the help they need. In this article, we will explore some of the most common myths about bankruptcy in New Jersey and separate fact from fiction.
Myth #1: Filing for Bankruptcy Will Ruin Your Credit Forever
One of the most persistent myths about bankruptcy is that it will permanently destroy your credit score. While it is true that bankruptcy will have a negative impact on your credit score, it is not a permanent or irreversible effect. Bankruptcy typically remains on your credit report for a duration of 7 to 10 years; however, you can initiate credit restoration as soon as your bankruptcy is discharged. Interestingly, filing for bankruptcy allows many individuals to improve their credit score since they can discharge their debts and start anew.
Myth #2: You Will Lose All of Your Possessions if You File for Bankruptcy
Another common myth about bankruptcy is that you will lose all of your possessions if you file for bankruptcy. While it is true that some assets may be sold to pay off your creditors, bankruptcy laws in New Jersey provide exemptions for many types of property. For example, you can usually keep your home, car, and personal belongings, as long as they are within certain limits.
Myth #3: You Can Only File for Bankruptcy Once
Many people believe that you can only file for bankruptcy once in your lifetime. However, this is not true. While there are limits on how often you can receive a discharge of your debts, you can file for bankruptcy more than once if necessary. In fact, some people may need to file for bankruptcy multiple times over the course of their lives to deal with ongoing financial challenges.
Myth #4: Bankruptcy is a Sign of Failure
Some people view bankruptcy as a sign of failure or weakness. However, this couldn\’t be further from the truth. Bankruptcy is a legal process that is designed to help people who are struggling with debt and financial difficulties. Filing for bankruptcy is a responsible and proactive step towards getting your finances back on track.
Myth #5: You Can’t File for Bankruptcy if You Have a High Income
Finally, many people believe that they cannot file for bankruptcy if they have a high income. However, this is not true. While there are income limits for some types of bankruptcy, such as Chapter 7, there are other options available for those who exceed those limits. For example, Chapter 13 bankruptcy allows individuals with higher incomes to restructure their debts and make affordable payments over a period of time.
In conclusion, there are many common myths about bankruptcy in New Jersey that can prevent people from seeking the help they need. However, by separating fact from fiction and understanding the true nature of bankruptcy, you can make an informed decision about whether bankruptcy is the right choice for you. If you are struggling with debt and financial difficulties, don’t let these myths hold you back from getting the help you need. Contact a bankruptcy attorney today to learn more about your options and take the first step towards a brighter financial future.