Arizona residents understand the economic disruption that has hit the entire country in recent years. If your family has been struggling to resolve severe financial strain, you are not alone. Many other households are currently navigating similar situations. Some people have options available, such as filing for bankruptcy, which they have been avoiding due to misguided information they have received about such programs.
There are many myths associated with bankruptcy. Before you determine whether such options are viable in your case, it’s a good idea to separate fact from fiction when it comes to debt relief and the implications of filing a petition.
5 myths you may have heard about bankruptcy
The following list includes common myths about bankruptcy, none of which are true and all of which often keep people from obtaining the financial relief they need to resolve crises and restore solvency:
- If you file for bankruptcy, you’ll lose your home, retirement accounts, assets such as your wedding ring or tools associated with your trade, and more.
- Filing for debt relief means you have failed your family.
- Bankruptcy destroys your credit score forever.
- You will not be able to rebuild your financial portfolio after bankruptcy.
- If you have a job with consistent income, you don’t qualify for bankruptcy.
As mentioned earlier, none of these myths are true, so if one or more of these issues has kept you from exploring debt relief options during a financial crisis, you might want to rethink your choices.
What are the facts?
The fact is, it is often possible to retain ownership of major assets when you file for bankruptcy. The Chapter 13 program, for example, allows you to keep your home, business, etc., while restructuring your payment plan or extending the life of a loan. As for the other myths listed in the previous section, here are the facts:
- Many people have used bankruptcy as a valuable financial tool and not only were they able to resolve debt, but they were also able to lay the groundwork for a stronger financial future, which is not a sign of failure, but rather, success.
- Both Chapter 7 and Chapter 13 bankruptcies remain on a credit report for a certain period, but not permanently.
- There are several ways to rebuild credit following bankruptcy, including obtaining a secured credit card or by becoming an authorized user on someone else’s account.
- You can set new financial goals, create a budget, start a business or set savings aside to become financially solvent again following bankruptcy.
- While Chapter 7 bankruptcy is for those whose income is below the state’s median, Chapter 13 is for those who demonstrate reliable, consistent income, which proves the ability to keep making payments on outstanding debts.
It’s wise to research Arizona bankruptcy laws and to discuss your specific circumstances and financial needs with someone who is knowledgeable about the system. You might just find the answers you’ve been looking for to resolve debt and build back stronger.