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Will choosing bankruptcy really mean I lose all of my stuff?

Bankruptcy has been unfairly depicted in the mainstream news and many other forms of popular media, leading many Washington consumers to adhere to a certain line of thinking concerning the process. Choosing bankruptcy can be a daunting task as is, and myths concerning the process can only further complicate the process. When financial stability is on the line, these popular myths can interfere with necessary decisions.

One of the biggest myths concerning bankruptcy is that the filer will lose anything and everything that he or she owns. From the car to the kitchen sink, supposedly nothing is sacred in Chapter 7 bankruptcy. This might be a popular belief, but most people who file for Chapter 7 never give up any of their possessions. Basic assets that are considered necessary for daily life are exempted during bankruptcy. These basic assets usually include homes and cars, as debtors would often have to incur more debt in order to achieve shelter and alternative transportation to and from work.

Chapter 13 also allows people to retain ownership of their assets. However, the value of those assets can play a large role in process. The value of retained assets is factored into the repayment plan created during the Chapter 13 bankruptcy process.

Wanting to keep a home and means of travel is an understandable desire for most people in Washington. Choosing bankruptcy often comes at both financially and emotionally stressful times in life, and retaining the stability of a house can be both comforting and financially smart. Debtors in Washington typically do not have to fear losing these staples of stability when making the decision to deal with their debt through bankruptcy.

Source: nerdwallet.com, "5 Bankruptcy Myths Dispelled", Sean Pyles, June 7, 2016

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