You probably hear a lot of things said about bankruptcy.  However, there are some myths about bankruptcy circulating in the market that can affect your decision on matters of finance.  In this article, let’s take a look at some of these bankruptcy myths and the truth behind them:
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The threat of bankruptcy cannot be ignored or underestimated.  Statistics show that the number of Americans who have file for bankruptcy has reached more than a million.  If you think that you will never be in a situation where you have to declare bankruptcy, you could be mistaken.

The reality is that anyone can be at risk.  Take a look at the following situations that can leave a person in bankruptcy:

Unfortunate Circumstances

Even if you’re enjoying financial prosperity today, you can never tell what will happen in the future.  Many circumstances that are beyond our control can lead to bankruptcy such as an unexpected illness in the family or divorce.  Natural disasters like hurricane, earthquake, or accidents can happen at the most unexpected times and leave one financially unstable.
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Yes, you have read it right! It is possible to rebuild your credit history even during the term of a bankruptcy. You need not wait for seven to ten years before you try to recover your financial health.

Most of the people who have had bankruptcy waited for their bad marks to close, before they started rebuilding their credit. They waited for a minimum of seven years for their bad credit reports to be finally dropped. Then, they made changes to their lifestyles, spending habits and money management. Eventually they succeeded in bouncing back from a bankruptcy.

But, it is still better to work on improving your credit score right away. You can do this even after you have filed or declared bankruptcy. How is this possible?
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A lot of us think that it is very difficult to get credit right after a bankruptcy. After all a bad credit report, especially one that contains a bankruptcy record, may present us as great credit risks.

But this notion is a thing of the past. You can easily rebuild credit even during the term of your bankruptcy. You just need to know how.

Though it is true that a bankruptcy mark reduces your chances of acquiring credit lines, the effects of this record do not last for long. Even if your bad credit report closes in seven to ten years time, you can still qualify for loans with good terms.
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The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, otherwise known as the New Bankruptcy Law took effect on October 17, 2005. It presented changes on the requirements and processes involved in filing for bankruptcy.

A lot of people perceive this new law as somewhat limiting. After all, the provisions of the bankruptcy law made it more difficult for some people to file bankruptcy. Is this contention true?

To better understand the new bankruptcy law, allow us to tackle the most significant changes included in the new law.

Provisions in the 2005 Bankruptcy Law

Let us enumerate the changes presented in the bankruptcy law.

1. Strict Requirements for Chapter 7 Bankruptcy. In the old law, people have more freedom to choose which type of bankruptcy to file. Most people chose Chapter 7 over Chapter 13 Bankruptcy. This is because this option allows them to liquidate their assets to retire their debts. But the new bankruptcy law is more prohibitive. It prevents people with higher incomes to file for Chapter 7 bankruptcy.
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