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Thursday, February 26, 2009

Bankruptcy: some misconceptions you should stay away from (2)

In my last post, I explained some of those harmful myths on bankruptcy filling, which terribly mislead all Bankruptcy seekers and other people facing debt problems and take a harmful toll on their financial stability. There are some more misconceptions about the procedure of bankruptcy filling, which therefore I want to make you people aware of.

• Husband and wife-both need to file for bankruptcy:
Husband and wife should file it together only if both of them want to eliminate and get rid of those debts which they both owe and both are liable to repay. Otherwise, the spouse who have not filed may be asked by the creditors/lenders to make the total payment of the amount of unpaid debt. Apart from that, it is not always essential that the spouses have to file bankruptcy together.

• A man files for bankruptcy-when life is debt-stricken:
Till date, bankruptcy filling is associated with the issues of social stigma and humiliation….let us not forget to admit this fact. Many of us still nourish this viewpoint that only when people suffer from a severe financial crisis and have got a huge debt burden they can not pay off, they tend to file for bankruptcy to get rid of all. Such incapability to pay the bills or loans in normally believed to have caused due to a lot of bitter experiences people face in their lives, like- divorce or mutual separation, job loss, accidents, or even serious illness.

• Bankruptcy raises credit profile and gets you easy-rate loans:
In one way, bankruptcy is the legal remedy to let you go from all your unpaid debts-undoubtedly, filling bankruptcy indicates your failure to make payment of your loans. Therefore, a bankruptcy can have most negative impact on your credit report, and can badly affect your credit score. Unfortunately, there is a terrible misconception that bankruptcy sets you free from all debts, hence no account of non-repayment or failure of payments of the loans remains in your credit history and your credit rating is improved….but that is wrong. Rather, the black spot of a bankruptcy information remains even for 10 years on your credit report…and your chances to get loans at affordable interest rates are decreased.

• Escaping back taxes is not possible by normal bankruptcy :
Normal bankruptcy filing can not let you go free from all your unpaid taxes, and if you think like many other people that you can escape your back taxes by just a bankruptcy, you are wrong. It is possible only by filling for a tax bankruptcy. This process needs you to file all your returns, and, additionally, all taxes you owe have to be at least 3 years old.


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