Virginia Beach, VA – Many people struggle with crippling debt for years because the word bankruptcy fills them with dread. It’s not just the social stigma, but the tangible fear of losing everything they own. If you feel the same, maybe you should sit down with experienced lawyers and learn to tell myths from facts. Bankruptcy is not a walk in the park, but it is not the end of the world, either. With good legal advice, you may walk away with most of your assets and none of your debts.
Myth No.1 – Bankruptcy will destroy your credit
That’s simply forgetting what accumulating debt does to your credit score. Short-term, yes, filing for bankruptcy will impact your credit, leading Virginia Beach bankruptcy lawyers say. Surprisingly, though, once you’re done with the bankruptcy process you may start receiving credit card offers. It may be just a psychological thing, but those who have recently gone through the agony of bankruptcy are viewed as more responsible. Sort of they’ve learned their lesson. If you prove responsible with your credit cards, your score will improve and you’ll once again be able to apply for a mortgage.
Myth No.2 – Going bankrupt makes you a failure
That’s one way of putting it and this explains the social stigma of filing for bankruptcy. However, as the most experienced Virginia bankruptcy lawyers point out, the current economic crisis has left millions of Americans struggling with debt. According to the Federal Reserve Bank of New York, Americans’ total credit card balance was $925 billion in the third quarter of 2022, up $38 billion from the first quarter of 2022.
If you put it like this, filing for bankruptcy is the responsible thing to do. If you file for Chapter 7 in Virginia, chances are your debts will be discharged in 4-6 months. You’ll be able to pick up the pieces and make a fresh start, unlike those who pretend they can manage their debt. How does that make you a failure?
Myth No.3 – Bankruptcy is expensive
Not true. The fees are manageable and some can be waived. There’s also the question of hiring a lawyer. Truth is knowledgeable Virginia Beach bankruptcy lawyers are well worth their money. Filing for bankruptcy without a lawyer won’t save you any money. On the contrary, you stand to lose a lot, because only a good attorney can tell you how to make the most of the bankruptcy exemptions, so you get to keep your house and your car.
Myth No.4 – You’ll lose everything
Actually, there are two types of bankruptcy available to Virginia residents. There’s Chapter 7, also known as ‘liquidation bankruptcy’, which does involve selling part of your assets to pay off your debt. However, Virginia’s homestead exemption allows homeowners to protect up to $25,000.00 in equity of their primary residence.
On the other hand, if you file under Chapter 13 you won’t have to sell anything. Chapter 13 is often referred to as ‘reorganization bankruptcy’ as it allows people to repay their debt under a 3-5 years plan. Meanwhile, the creditors are kept at bay and you retain all your property. Only seasoned bankruptcy lawyers can explain the difference between Chapter 7 and Chapter 13 and advise you which to choose taking into account your financial situation.
Tip: Since you’ll be dealing with lawyers and court clerks, now would be a good time to educate yourself a bit on legal matters.
Source: 2022 Credit Card Debt Statistics