The Truth About a Serious Issue
Bankruptcy can be a great solution for people who qualify to relieve their burden of debt. However, many people buy into the several myths about bankruptcy that prevent them from seeking the help they need. In reality, however, these statements are not true. Here are several common bankruptcy myths and the real truth about each one.
Myth #1: Bankruptcy Ruins My Credit Score
One of the more common myths about bankruptcy is that approval for the process damages one’s credit score beyond repair, leaving them hopeless about ever getting a loan or another line of credit again. In reality, some people who file for bankruptcy already have a bad credit history. In fact, many people report that their credit scores actually increase after going through bankruptcy.
While it’s true that you may face credit limits after filing for bankruptcy and your status will remain on your credit report for up to 10 years, you can rebuild your credit back over time. Some credit card companies send targeted offers on limited credit cards to people who have completed the bankruptcy process as a way to give them a fresh start.
Myth #2: Bankruptcy Means You Lose Everything You Own
Some people believe that by filing for bankruptcy, you open the door for your personal belongings to get repossessed by credit card companies. However, many states have exemptions built into state law that prevent people from losing their belongings (with exemptions varying from state to state). These exemptions may protect items such as your clothes, your house, your vehicle, and other important belongings. Even if a personal belonging is non-exempt, you might be able to keep it if you agree to pay back a certain amount of debt.
Keep in mind that bankruptcy was designed to help people get a fresh start. The process is not intended to hurt someone and rob them of all they own.
Myth #3: I Make Too Much Money to File For Bankruptcy
There’s a myth floating around that someone cannot make a certain amount of money per year and still file for bankruptcy. However, anyone can file for bankruptcy if they choose to do so. Whether you qualify for Chapter 7 bankruptcy or not depends on passing the means test. If it’s determined that you have enough income to pay some of your debt, you may still be able to file for Chapter 13 bankruptcy to restructure your debt and work out a payment plan for what you are able to pay. Regardless of your income, you have options available, and your bankruptcy attorney can guide you to what the best solution is.
Myth #4: Filing For Bankruptcy Means I’m a Failure With Money
This myth is perhaps the hardest-hitting. The common perception about filing for bankruptcy is that those who pursue that option are incapable of properly handling their financial resources when, in fact, this is simply not true. Many people who file for bankruptcy are good people who have worked hard to provide for themselves. Often, people who file for bankruptcy are doing so because of means beyond their control, such as crushing medical debt or the loss of employment.
Filing for bankruptcy does not mean that the filer is a failure. Instead, it shows that person understands the severity of their situation and is taking advantage of an opportunity to correct the problem.
Myth #5: I Can Handle Bankruptcy Myself. It’s Easy.
Some people assume that filing for bankruptcy is as simple as handing in some paperwork to a court and going from there when, in fact, the process can be very complicated. It’s important that you work with a bankruptcy attorney who understands the complexities of bankruptcy law and can guide you each step of the way.
At Duke Law Firm, P.C., we’re prepared to help you seek the financial relief you need. To schedule a consultation with a member of our team, call us at (585) 449-4987 or visit us online and fill out our contact form.