Filing for bankruptcy is scary. There is no denying that it can feel overwhelming and incredibly stressful, especially if you are not aware of the insolvency procedure and think that you are at risk of losing your entire life’s savings and belongings.
Over the years, a lot of bankruptcy myths have been heard, and instead of being disregarded, are being believed by a wide section of the population. However, it is important to realize that sometimes, bankruptcy might be the only option for your financial resolution.
Here are some bankruptcy myths that are absolutely untrue.
You Are Likely to Lose Everything
Most people shy away from filing for bankruptcy because they believe that they will lose all their belongings. However, the chances that you can keep all of your possessions are high. After a bankruptcy order is made, all your property becomes the “bankrupt’s estate.” In the same way, the property obtained during personal insolvency is also eventually amalgamated with the estate.
Even though a bankruptcy estate will take control of your assets and freeze your accounts, that does not mean that you will be left without any assets or belongings. Tools of trade, such as equipment, cars, and anything important to run your business or employment, will be in your possession. After all, how can you earn a living and make money to repay your creditors if you do not have the resources to do so? Moreover, household items, such as bedding, clothing, furniture, utensils, and basic equipment, will not be taken as they are essential for you and your family’s survival.
Hiding Assets is an Option
Honestly is of utmost importance with your bankruptcy trustee. This means you cannot lie about your assets. In fact, any non-disclosed or hidden assets can cause severe problems. Your bankruptcy trustee might even suspend your bankruptcy order for an indefinite period of time. Basically, you will face a bunch of consequences that could be avoided if only you had stayed honest.
A bankruptcy trustee is responsible for taking care of your finances and coming up with a realistic debt management plan. This can only be done if you reveal all the relevant information. If you do not, there are chances of an arrest warrant. Yikes!
You Will No Longer Be Allowed to Work
Another common bankruptcy myth is that you will not be allowed to work. This is not true. In fact, your trustee and creditors have no control over your work. This is because despite declaring bankruptcy, you still require an income so that you can make repayments and complete the debt management plan. Hence, work is necessary!
However, there are some exceptions, especially if you are working as a director. You will have to ask the court for a special exemption to continue working at such posts. Moreover, bankruptcy might have an effect on your position within the finance sector, and you may not be free to obtain credit.
If you have more questions about how bankruptcy impacts your career and future credit, make sure to consult a professional as soon as you can. Better to get all your questions answered beforehand than deal with any last-minute surprises!