By: Zachary Pienkowski
Living in a society that has learned to lived completely swamped in debt, it is important to understand what really is involved in a bankruptcy proceeding. In many cases, people think that your house is off limits to the creditors. This is true in some situations, but bankruptcy law vary by region and it is critical to fully understand the laws in your area before you file. In some cases, the amount of equity you have in your home is protected, but in others that equity is not protected and you run the risk of losing your residence. Probably the most common myth about bankruptcy is that once you file all of your debts are gone you are get off free. That may be true with some debts like credit cards, but student loans, alimony, and support are not going away. Making the decision to file for bankruptcy should be carefully thought out because it will not leave you without any debts. In addition to not having control of any of those debts anymore, you unfortunately do not hold the rights to your assets anymore either. Another myth is that even though you declared bankruptcy that you will never be able to get a credit card or establish credit again. This is not entirely true, however, it is not something that will change over night. Most people typically are unsuccessful in repairing their credit within the first few years. Bankruptcy may also last longer than you think. Generally you are discharged after a period of time and can begin to rebuild your life. There are some people that can step in the way of that and keep you bankrupt for longer than you expected. This is rare however unless the bankruptcy was due to a case of fraud, in which the punishment in significantly more severe.
Sources:
http://ca.finance.yahoo.com/personal-finance/article/bankratecanada/1344/five-bankruptcy-myths
http://kclau.com/wealth-management/bankruptcy/
http://www.lawhandbook.sa.gov.au/ch03s03s01.php
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