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Busting myths about bankruptcy

Filing for bankruptcy might be an option for South Carolina residents who are overwhelmed by financial obligations, but many ideas that people have about the procedure may make it an unappealing prospect. There are many misconceptions about bankruptcy and its effects, and understanding the truth of how it works and the effect it can have could help someone who is making a decision on how to deal with consumer debt.

It is commonly believed that filing for bankruptcy means that the person or couple filing will lose everything they own. In reality, there are assets that are exempt from liquidation in chapter 7 bankruptcy under both state and federal law.

People also may believe that bankruptcy gets rid of all the debt they have, leaving nothing to pay back. Chapter 7 does discharge many types of unsecured debt, including credit card and medical bills, but other types of debt such as back child support and most student loans are not discharged and remain the debtor's responsibility.

Bankruptcy stays on credit reports for seven to 10 years, which many people believe makes it impossible to get credit or a loan again after bankruptcy. However, credit can be rebuilt, and sometimes this process can begin shortly after filing. A secured credit card that requires a deposit as security can allow people to make charges and payments, which will be reported and can help rebuild their credit rating.

In some cases, personal bankruptcy may be a better solution for someone than continuing to try to make full payments on debt. The two primary forms of consumer bankruptcy are Chapter 7 and Chapter 13, and an attorney can describe the differences and outline the eligibility requirements.

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The Huggins Law Firm, PA

Columbia Office
1812 Lincoln Street
Suite 201
Columbia, SC 29201

Phone: 803-764-1558
Fax: 803-764-1563
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Charleston, SC 29407

Phone: 843-509-0039
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