Bankruptcy is on the rise thanks to the credit crisis affecting the US, Britain and most of Europe. However, many people are filing for bankruptcy without knowing the full story. This article explodes some bankruptcy myths.

Myth 1: You can Keep Inherited Money

If you come into any money while bankrupt, whether it be inherited or won, it must be declared. Any money newly obtained will be used to repay your creditors. If you are caught having not declared additional funds, a Bankruptcy Restraining Order will be imposed which will extend the terms of your bankruptcy.

Myth 2: Bankruptcy is an Easy Way to Escape Debt

Bankruptcy is a very serious matter, it affects your credit rating which damages your eligibility for future credit, your business, your career, and even your health. If you are planning on applying for bankruptcy you should be fully aware of bankruptcy consequences.

Myth 3: Your House and Car are Safe

Sadly you have every chance of losing your most valuable assets in order to make repayments on loans. For most people this means their home and car have to be sold to raise adequate funds. If all goes well you should be able to keep the contents of your home, such as your large appliances and sofa etc.

Myth 4: You Could Lose Your Job

Bankruptcy will not cost you a job unless you hold certain governmental or financial positions. Nor are you obliged to inform your employer of your bankruptcy, however, it will be a matter of public record.

Myth 5: Bankruptcy Makes Future Credit Impossible

Even people who have filed bankruptcy can get a mortgage and credit card. Unsurprisingly, it puts the best mortgage deals out of reach if you have bankruptcy on your credit history, however, is it impossible to get a mortgage? No. What may be surprising however, is that bankruptcy can make getting a credit card easy. Card companies know that if you have filed bankruptcy you should have no debt.

Myth 6: Bankruptcy Discharges All Debts

Not all debts can be discharged under bankruptcy, such as child support contributions, fines and student loans. Check with an accountant or lawyer for more details.

Kent Mills

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