The new bankruptcy law, passed just three months ago, has created a lot of confusion. Meanwhile, a lot of age-old myths about bankruptcy continue. For example, there's the perception that bankruptcy will give consumers a chance to start over with their credit. That is not necessarily the case--bankruptcy stays on a credit report for seven to 10 years--impacting a consumer's credit profile. That, in turn, can lead to higher interest rates and perhaps even some difficulties in getting a job.
Another myth: All debts can be discharged in bankruptcy. The truth: Certain debts such as child support, student loans and most taxes may not be forgiven.
Experian, one of the nation's three largest credit-reporting firms, has sought to correct the top 10 myths about bankruptcy. Bankrate.com, a handy Web site that provides free rate information to consumers on more than 300 financial products, including mortgages, credit cards, and car loans, has an even more detailed explanation about the myths.
Meanwhile, the new law that makes it harder for debtors to completely wipe out their debts isn't working as its supporters had envisioned--at least not so far. Supporters had hoped the requirement that debtors first consult credit counselors before filing for bankruptcy would steer consumers away from the courts and into debt-repayment plans. But that's not what's happening. For details, read my story in this morning's Post.
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