Filing for bankruptcy can give you financial relief if you are in debt and have no other viable alternative to paying off debt. Creditors will give you a hard time, which will undoubtedly affect your peace of mind, and filing for bankruptcy can help relieve your anxiety. However, this can be a daunting task for many people, especially for those who lack basic knowledge about personal insolvency. There are also several stigmatic misconceptions about declaring bankruptcy that are widely believed to be facts, but they are incorrect.
As such, this article will debunk 7 misconceptions about bankruptcy to help you understand how the process works.
1.The bankruptcy makes you fail
Does filing for bankruptcy make you fail? The most common misconception that many people have is that people who file for bankruptcy are failures in life. This is one of the most frequently asked questions, especially for homeowners in Canada and the United States who are unable to pay off their mortgages. The answer to this question is no, filing for bankruptcy does not make you a failure. Most people go into debt due to factors beyond their control, such as job loss or medical emergencies, while others have to file for bankruptcy due to mismanagement of funds in some cases. does not necessarily mean that they are at fault. Bankruptcy allows them to correct their mistakes and make better decisions in the future.
You lose everything
When you file for bankruptcy, you will certainly lose some property that will be sold by the trustee to settle your loan. However, you will not lose everything as others believe. You can keep assets like cars, tools, and work equipment that you use to make money. You will not lose the household goods that you use daily with your family.
3.You can hide certain assets
When you file for bankruptcy, the law requires you to declare all of your assets to the bankruptcy trustees who will take over the loan. Failure to disclose certain assets can result in severe consequences that may result in the suspension of your bankruptcy order. This misconception that you can hide certain assets will not do you any service because it can make your situation worse. The trustee in bankruptcy is there to help you with a debt management plan to not steal your assets, so it is essential to disclose all information about your assets.
4.Everyone Will Know Your Bankruptcy
Another common misconception is that some people believe that other people will soon discover that you have filed for bankruptcy. Official bankruptcy notices are published in the insolvency register and are intended specifically for creditors. Other than financial institutions, other people cannot access this information about people who file for bankruptcy. You can still ask your debt management trustee for advice if in doubt, but confidentiality is a top priority when you file for bankruptcy.
5.You can no longer work
Some people think that they will not be able to work after filing for bankruptcy, which is not true. You can continue working at your job so that you can pay off your debt. Working is a sign that you are committed to paying off your loan, so bankruptcy does not affect your work. However, if you work as the director of a company, you must obtain an exemption from the court in order to continue playing your role. Most people in positions in the financial sector often face certain bankruptcy restrictions. However, you should request an insolvency notice if you belong to this group.
6. Bankruptcy can ruin your life
Many people mistakenly believe that bankruptcy can ruin your life and that you may no longer be able to get a loan. Indeed, bankruptcy will have an impact on your life for a specific period, but it is not true that it will permanently ruin you. This lasts 6 years, then you can start rebuilding your credit history again, which can help you access loans in the future.
7. Bankruptcy is expensive
Some people also think that bankruptcy is expensive, but that is not true. You can lose money if you hire a lawyer, but this will help you to remove the burden of having a huge debt on hand. Filing for bankruptcy also gives you peace of mind and financial relief as you plan for your future, so the initial costs are well worth it.
Filing for bankruptcy relieves you if you are under enormous debt pressure. While the whole process can be difficult, many misconceptions that you probably believe are simply not true. To dispel these myths, you can seek advice from your debt management trustee.