Filing consumer bankruptcy is never easy, but the myths and false facts about filing and how it will affect your life are rampant. Your friends will have opinions. Your trusted advisers will tell you why you shouldn't do it. Even the Internet gets it wrong. Read on while we debunk some of the more common ones.
1. Filing Bankruptcy Means Failure – Not True
It is probably the worst and most harmful myth out there. Our founding fathers recognized the value in filing bankruptcy and included it in the U.S. Constitution (Art. 1, Section 8, Clause 4).
Over the past ten years, several studies have shown that most bankruptcies are caused by issues outside the control of most folks, including crushing medical debt, job loss, and divorce. Few people file bankruptcy because they mismanage their money. Even then, it doesn’t mean they’re a failure because they file bankruptcy.
Just the opposite. It shows that they understand the need to correct their issues and do something about them.
2. Losing All The Property If Someone Files Consumer Bankruptcy – Not True
No one's going to swoop in and cart away your 20-year-old sofa or your kids’ toys. If you’re an individual or a couple, you’re allowed to keep certain items up to a specific value. These are called exemptions.
Due to exemptions, people will have to give up property in less than 5% of bankruptcy cases. Exemptions vary by state, but you can exempt your household goods, at least one car, clothing, retirement savings, and even equity in your home in almost all states.
3. Paying Off My Debts Is Always a Better Option – NOT TRUE!
It is not true for any number of reasons. It can take you years to pay off those debts. You may be able to eliminate them in a few months with a bankruptcy case and rehabilitate your credit in two years with care. Sometimes, you just can’t pay off the debts because there’s too much debt ever to get a handle on. Click here to find out more about the consumer credit protection act.
Sometimes you're facing foreclosure or repossession and just don’t have the time or immediate resources to prevent it.
4. Bankruptcy Will Solve All The Financial Problems – Not True!
Bankruptcy can eliminate your obligation to pay your debts. Still, it cannot reform your spending habits. Make sure you have a job that pays you enough to support your lifestyle, change your taste in the finer things in life, or salvage your marriage.
It can be the start of a new way of thinking about money if you take advantage of it. For more information on consumer bankruptcy, click here.
What Is The Consumer Credit Protection Protection Act?
The Consumer Financial Protection Act of 2010 created the Consumer Financial Protection Bureau, which opened its doors in 2011. The Bureau has supervisory authority for depository institutions with more than $10 billion in assets and has examination and enforcement powers for financial industry participants that offer consumers financial products.
The Act gave the Bureau broad authority to protect consumers from unfair, deceptive, or abusive acts and practices. It transferred lender data collection responsibilities under the Home Mortgage Disclosure Act from the Federal Reserve to the Bureau. The Bureau is also responsible for overseeing mortgage lending and servicing disclosures and requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act.
The Act also instructed the Bureau to create a database where consumers can submit complaints about financial service companies and products. For more information on consumer Bankruptcy, click here.
Fair Debt Collection Practices Act Of 1977
Many stores, hospitals, and other organizations attempt on their own to collect unpaid bills, but thousands of merchants, professionals, and small businesses rely on collection agencies to recover accounts receivable.
This law regulates how third-party collection agencies conduct their business. It covers the collection of all personal, family, and household debts by collection agencies. It does not deal with a group by creditors themselves; the consumer’s remedy for abusive debt collection by the creditor is in tort law.
Communication with third parties about the debt is not allowed, except when the collector may need to talk to others to trace the debtor’s whereabouts (though the collector may not tell them that the inquiry concerns a debt) or when the collector contacts a debtor’s attorney if the debtor has an attorney.
The federal statute gives debtors the right to sue the collector for damages for violating the statute and for causing such injuries as job loss or harm to reputation.
Conclusion
Another joint consumer bankruptcy If your finances are chaos, you’re much less likely to be approved than if you file bankruptcy to resolve them.
