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Bankruptcy Myths and Facts Top 10

Myths about bankruptcy can be dangerously misleading. Debts takes pleasure in dispelling bankruptcy myths, which either cause needless anxiety or lull people into a false sense of security.

Common bankruptcy myths include:

1) You can keep any money won or inherited while bankrupt

False. Any money received when bankrupt must be declared to the trustee and paid to you creditors.

2) Any bankruptcy restrictions lasts 12 months

If you fail to negotiate with the terms of your bankruptcy or are found guilty of breaching terms, you could be subject to a Bankruptcy Restraining Order. In these circumstances your bankruptcy can be extended indefinitely.

3) Bankruptcy is an easy option

Bankruptcy is always a last resort and has severe consequences. Visit Consequences of Bankruptcy | What are they. Alternatively, visit our Debt Management Plan section for less drastic debt reduction programme that allows you to keep your home and reduce your debts.

4) You can have a fresh start in a new job

It is now common for many companies in the financial services industry and security firms, to use credit information as part of an individual’s reference.

5) You definitely get to keep your car and house

You can lose any valuable asset to repay your debt.

6) My spouses bankruptcy will not affect my credit

If you have a joint account or a mortgage with your spouse who has poor credit, the negative credit rating will be mentioned on your file.

7) All debts are discharged under bankruptcy

False. Student loans, Child Support arrears and most fines are not discharged.

8) Bankrupcy could mean you lose your job

Not unless you hold certain positions in the finance sector or in government office.

9) Getting a mortgage is impossible after bankruptcy

A mortgage is not impossible but will be at higher interest rates.

10) Late payments on a bank report are as bad as bankruptcy

While late payments can create black marks on your credit reference report, bankruptcy does leave a tougher stain.

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