Demystifying bankruptcy

No one is immune from falling on hard times, even those who curtail spending and save diligently. The prospect of filing for bankruptcy is overwhelming, especially if you fall prey to myths surrounding personal bankruptcy.

Bankruptcy is a tool that can provide a fresh start for anyone suffering under the weight of debt.

Can you keep your house and vehicle after you file for bankruptcy?

In most cases, you will be able to keep your house and your car after filing for personal bankruptcy. Under Delaware law, a portion of the equity in your home and automobile may be exempt, and even if it is not fully exempt you are likely to retain your house and car.

Does your employer need to know that you filed for bankruptcy?

You typically do not need to disclose bankruptcy to your employer. If you are applying for jobs, personal bankruptcy may not show up in a criminal background check (bankruptcy is not a crime), but it will appear in a credit check or a Federal Bankruptcy Search. If your debt or bankruptcy proceedings involve wage garnishment, your employer will receive notice from a court or government agency that a percentage of your earnings must be withheld.

Can I discharge my student loans by filing for bankruptcy?

In most cases, student loan debt is not dischargeable. If you have trouble making payments, your best option is to contact your loan servicer about repayment plan options. In rare circumstances, there may be exceptions if making payments presents an undue hardship. You should continue making payments in the meantime.

Separating bankruptcy myths from facts can prevent debt from spoiling your future.