There are a lot of false facts and myths surrounding bankruptcy, which have made it hard for a lot of people to decide their financial future. Sure, filing for bankruptcy isn’t easy, and people will always talk, but sometimes, this is the best option for you to get debt relief. Who doesn’t want relief from some of their debts? I know I do. Filing for Chapter 7 or Chapter 13 bankruptcy isn’t a simple feat, but it is a beneficial one once you are able to jump through all the hoops. In this article, we will discuss and debunk some of the myths surrounding bankruptcy.
Myth 1 – Filing for Bankruptcy Means You are a Failure
This is a very harmful myth as it makes people stick to bad debt situations rather than seek debt relief. Over the years, studies have shown that bankruptcies are caused by situations out of the control of people like medical bills, divorce, or job loss. There are fewer situations where money mismanagement is the reason for filing for personal bankruptcy. Filing for bankruptcy shows that you know there are issues to be corrected, and you are taking the necessary steps to do that.
Myth 2 – You’ll Lose Everything
Filing for bankruptcy doesn’t mean that you’ll have to lose your assets like your house or your vehicle, contrary to the myths. Most Chapter 7 bankruptcy cases are no-asset cases, which means that you do not have to give up your assets. On the other hand, you have to value your assets into your repayment plan for Chapter 13 bankruptcy. You still get to keep all your assets for this type of bankruptcy as well. In some cases, you may need to liquidate some assets to offset debt as a last resort.
Myth 3 – All Your Debt Will Be Relieved
Even though Chapter 7 and Chapter 13 bankruptcy offers relief for some types of debt, there are a few exceptions. Some of the debt that will be relieved includes credit card debt, medical debt, personal loans, and other unsecured debt. Some of the exemptions that you will not get relief include student loans (in most cases), recent income tax, child support, and alimony. There are unique circumstances where non-dischargeable debts can be relieved.
Myth 4 – Filing for Bankruptcy isn’t a good option
Contrary to popular notions, paying off your debts isn’t always the best option. Filing for bankruptcy isn’t a bad idea if you find yourself in a bind financially. Despite the hit, your credit score will get in the beginning, filing for bankruptcy is a good idea.
Myth 5 – Filing for Bankruptcy will Spoil Your Finances
No, your financial future will not be ruined if you file for bankruptcy. Your credit score will recover eventually if you continue to make good decisions. However, you will have limited credit access and pay high-interest rates until the bankruptcy leaves your credit report. There are different ways to revive your credit score after filing for bankruptcy, so you do not have to fret about the state of your finances.
If you are considering bankruptcy, you need the knowledge and experience of an attorney. Dsouza and Strachan legal group can guide you through this complex financial situation. Contact Dsouza and Strachan today for a free consultation.