What are some of the most common myths about the bankruptcy process?
Myth One: Filing bankruptcy is a personal failure
The Truth: Most bankruptcies are a result of financial distress beyond the individual’s control. With foreclosures, evictions, and financial distress directly related to the pandemic, more people need a financial fresh start.
Myth Two: Both spouses have to file for bankruptcy
The Truth: One spouse can file bankruptcy alone. My firm has filed hundreds of cases where it made sense for one spouse to file without the other. In fact, an individual case is often the best option when most of the debt is in the name of only one spouse. And since credit reports and bankruptcy filings are individualized, the non-filing spouse’s credit is not impacted.
Myth Three: Bankruptcy ruins your credit forever—or at least an entire decade
The Truth: A Chapter 7 bankruptcy case will remain on your credit report for around 10 years, but the impact it has on your credit lessens over time. For example, you may qualify for a mortgage in as little as 2 years after your Chapter 7 bankruptcy; and you can start rebuilding your credit as soon as you receive your bankruptcy discharge.
A Chapter 13 bankruptcy remains on your credit for around 7 years. But you can qualify for a mortgage in as little as one year after you complete your case. And in either Chapter 7 or 13, your credit score can actually improve after bankruptcy as a result of the decrease in your debt-to-income ratio.
Law Offices of Lee M. Perlman
Lee M. Perlman, Esquire
1926 Greentree Road, 100 | Cherry Hill, NJ
(856) 751-4224 | NewJerseyBankruptcy.com