Getting Your Finances Back On Track

5 myths about filing for bankruptcy

On Behalf of | Jan 10, 2017 | Bankruptcy

Filing for bankruptcy is a serious decision and one that most people resort to when they have exhausted other possible avenues for settling burdensome debt. You may be among those who are struggling financially but have heard terrible tales about bankruptcy and wonder if you should even consider filing. Here are five myths about this process that should be debunked.

Only financial irresponsible people file for bankruptcy

The three main reasons people decide on bankruptcy are divorce, costly medical care or loss of a job. In each case mounting debt is, of course, a factor, but irresponsibility or credit abuse are not accurate terms to apply to the problems.

Bankruptcy will discharge all past debts

In general, filing bankruptcy enables you to start afresh and turn a new page in your life. However, there are certain debts that cannot be removed. Any domestic support obligations you have, such as child support or paying alimony, will not be discharged by the court under any circumstances. Restitution because of a crime is another debt that stays with you.

Bankruptcy ruins your credit permanently

This is simply not true. You would be surprised to see how soon credit card offers turn up after you emerge from bankruptcy proceedings. You might wish to talk to your attorney about credit cards and how they can help you rebuild your credit. Signing up for a secured card with a low limit can help you begin to improve your score. If you make payments on time, you will probably be able to get regular credit card within six to twelve months, and watch your score begin to improve.

Bankruptcy only requires filling out forms

You may decide that bankruptcy is the best way for you to handle overwhelming debt, but the process involves far more than just filling out forms. Bankruptcy is a serious matter with the potential for litigation. The forms you do complete have legal implications. They are filed in federal court and reviewed by trustees whose job is to liquidate your assets.

You will lose all your property when filing bankruptcy

You will be relieved to know that in a Chapter 7 bankruptcy action, only non-exempt property can be sold. Your attorney can help you understand the difference between exempt and non-exempt; however, be assured that thousands of bankruptcy cases are filed each year in which the debtors retain all their property, including houses and vehicles.

Time to seek legal help

Just the thought of filing for bankruptcy may be enough to keep you up at night. However, if you are tired of worrying about debt, it may be time to contact an experienced attorney who handles bankruptcy cases. You can get valuable advice and support – and begin to enjoy quality sleep once more.