If you have found yourself in financial turmoil because of increasing debt, you may feel as though you are struggling to keep up with the basic necessities, such as your mortgage payment and monthly utility bills. Because of this, you may have considered filing for chapter 13 bankruptcy. However, you may have some misconceptions about the law that could either make you hesitant to file or could lead you to deeper financial distress.
1. You Will Lose Everything You Own If You File for Bankruptcy
One misconception you may have about filing for bankruptcy under chapter 13 is that you will lose everything you own during the process. You may fear that once you file, the bank will take your house and/or car, leaving you with nothing.
However, chapter 13 bankruptcy will not cause you to lose your house -- in fact, it can help save you from foreclosure or repossession. Once you have filed, the bank will set up a different payment plan to help make it easier to make your payments. Having a lawyer mediate for you during the process can help you and the bank come to a fair and reasonable repayment agreement.
2. You Will No Longer Owe Any of Your Creditors After Filing
This next misconception you may have about chapter 13 bankruptcy that could get you into more trouble financially if you continue to believe it is that you will no longer owe any of your creditors once you file. You may believe that your debt will be wiped clean, leaving you with no financial obligations.
However, even if you do file for bankruptcy, your debts will still exist. What filing does is set up a payment schedule with your creditors to make repayment easier. The creditors, however, must approve of the filing and be willing to work with you. An attorney can help you with the process by contacting the creditors on your behalf.
Along with the above misconceptions, another one that you may have is that you can go through the filing process by yourself. However, doing so could delay the process or get you into a mess that might hurt your financial status even more. Instead, you should contact a chapter 13 bankruptcy attorney near you to discuss the particular laws and processes of your particular state, as well as talking about the possibility of having them help you through it.