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4 common misconceptions about the bankruptcy process 

On Behalf of | Dec 28, 2022 | Chapter 7 And Chapter 13 Bankruptcy |

Most people are scared of filing for bankruptcy due to widespread misconceptions about how everything works. As a result, many deserving individuals sink deeper into debt or lose their possessions to debt collectors, while some end up facing creditor lawsuits. All these can be avoided by filing for bankruptcy.

Therefore, it helps to get your facts straight if you are contemplating bankruptcy. That way, you will make decisions based on the truth rather than unfounded claims about the effects of bankruptcy on your present and future life. Here are some myths about filing for bankruptcy in New Jersey.

1. You will lose everything

Bankruptcy is designed to help you get back on your feet, which may be impossible if you lose all your property. It is why bankruptcy exemptions exist. You can legally keep certain assets up to a specific value by exempting them.

2. Your credit score will be permanently affected

While filing for bankruptcy will negatively affect your credit rating, it is not a permanent situation. You can gradually rebuild your credit score by paying your bills on time, sticking to a budget and using special credit facilities.

3. You only have one chance

If you filed for bankruptcy before, it does not mean you cannot do it again. It is possible to file for bankruptcy more than once, although certain timelines may apply.

4. Bankruptcy discharges all debt

Not all debts are discharged when you file for bankruptcy, contrary to what many people think. You may still have some debts, such as child support obligations, alimony and student loans.

That said, it is best to get appropriate guidance when faced with the prospect of bankruptcy. It will help you get answers to any questions you might have and address your concerns regarding the whole exercise. In the end, filing for bankruptcy can leave you much better off than you were. 

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