You may feel like filing for bankruptcy is the lowest place you could be, but it’s just not true, and you aren’t alone. Well over a million Americans file for bankruptcy each year, yet most people don’t know much about bankruptcy. Let’s separate the facts from the fiction.
The Most Common Myths About Bankruptcy
- Bankruptcy permanently ruins your credit score – After filing for bankruptcy, your credit will take a hit, but then it will start to rebuild. Many people who file for bankruptcy find that it suddenly becomes much easier to start repairing the damage that holding onto old debts did.
- All your debts with be discharged – It’s true that bankruptcy offers most people a chance to start over fresh, but there are some debts that can’t be discharged. Some taxes and child support payments, for example, will not be discharged.
- You will lose everything – Most people who file Chapter 7 bankruptcy, sometimes called individual bankruptcy, never have to give up anything. There are several generous exemptions that allow most petitioners to protect most, or even all, of their possessions.
- People who file for bankruptcy are financially irresponsible – Rather than poor financial planning, most bankruptcies are caused by long term-unemployment or the high cost of medical care. The people filing for bankruptcy are not lazy or irresponsible; they’re well-intentioned teachers, doctors, and even lawyers that found themselves in a tricky situation and have no other way out.
Too many people make the mistake of looking at bankruptcy as if it is the end. It’s more often a new beginning. The weight of old and unpayable debt can only do you more harm. Talk with a bankruptcy attorney to find out how you can get away from it and start over.
Julian, Crowder and Shuster is a firm of Lewisville bankruptcy attorneys who are eager to help their clients achieve their goals of becoming financially free from overwhelming debts.