Declaring bankruptcy is usually a decision that's only undertaken after much thought. Even though this step may be the best and most sensible decision for your particular situation, you may be extremely reluctant to declare bankruptcy, often because of popular misconceptions about personal bankruptcy. The following are some common myths you may be harboring about bankruptcy Las Vegas laws.
Myth #1: You May Lose All of Your Assets
Even though laws are different from state to state, every state has exemptions that protect certain kinds of property. In Nevada, state exemptions cover household items, part or all of automobile equity, and up to $550,000 of your home equity. Federal law exempts your retirement saving accounts and pension plans. Only the IRS may be able in some cases to touch these accounts.
Myth #2: Your Credit Will Be Ruined Forever
It's true that a bankruptcy can stay on your credit report for as long as 10 years. However, you can begin building up your credit score immediately. Many people qualify for new homes, automobiles, and new credit cards soon after the bankruptcy.
Myth #3: It's Impossible to Get a Mortgage After Bankruptcy
This simply isn't true. Each loan program has its own waiting period for application eligibility:
- FHA loans – 2 years
- VA home loans – 2 years
- Conforming mortgages – 4 years
- USDA home loans – 3 years
Myth #4: Creditors May Still Be Able to Sue You for Debts
When you file for bankruptcy, you receive protection from your creditors and their representatives. Federal law dictates that your creditors may not contact you for any reason by means of correspondence, bills, or phone calls. Your creditors have to stop all collection efforts.
Myth #5: All of Your Debts Will Be Forgiven
While most debts will be forgiven, there are exceptions. Personal debts like child support, some types of tax debt, and student loans are usually not forgiven. Debts like personal loans, medical bills, and credit cards are among the debts that can be forgiven.
As you can see, there are many false notions about bankruptcy. Before making a decision one way or the other, you should check state regulations on bankruptcy to get the actual facts.