Filing for bankruptcy can seem like a desperate decision for getting out of debt that leaves many people feeling embarrassed. Because of this, there are many myths associated with filing for bankruptcy that are simply wrong. In today’s blog, bankruptcy attorneys Groce & DeArmon clear up some of this uncertainty by debunking myths associated with filing for bankruptcy.
Related post: How to File for Chapter 13 Bankruptcy
Myth 1: It Will Ruin Your Credit Score Forever
One of the myths associated with bankruptcy is that it will destroy your credit for seven to 10 years. In reality, most people’s credit scores rebound within six months after bankruptcy is finalized. And in some cases, credit scores improve greatly after bankruptcy. Doing the right things to restore your credit like getting a secured credit card can help you get on the right track to a fresh financial start.
Myth 2: You Will Lose Everything
Many people believe that you will lose everything if you file for bankruptcy, including your car, your house, and whatever other assets you own. This is simply not true! Most Chapter 7 bankruptcy cases offer exemptions that allow you to keep your belongings up to a certain value.
Myth 3: Paying Off Debts Is a Better Option
Filing for bankruptcy isn’t necessarily a bad idea. In fact, if your debts are more than 50% of your annual income and you are not likely to pay them off in the next five years, bankruptcy is probably your best option. The immediate and long-term relief that you can achieve through bankruptcy oftentimes outweigh the downsides.
Myth 4: All Of Your Debts Will Be Forgiven
While it is true that many of your debts can be discharged or forgiven in Chapter 7 or Chapter 13 bankruptcy, it is important to remember that there are some debts that are less likely to be discharged. In general, this includes debts that you are personally responsible for like taxes, child support, student loans, and debt from fraudulent cases.
Myth 5: Filing For Bankruptcy Makes You a Failure
Some people believe that filing for bankruptcy is an embarrassing personal failure. In reality, many people file for bankruptcy as a result of situations out of their control, like medical bills or stagnant wages. Even if you are filing for bankruptcy because of mismanaged finances, it is important to remember that bankruptcy is a responsible step in the right direction to fix your financial situation.
Related Post: Filing for Bankruptcy Myths, Part 2
Bankruptcy Resources at Groce & DeArmon
If you find yourself in a difficult financial situation and want to learn more about how bankruptcy can help you, bankruptcy attorneys Groce & DeArmon can help clear up some of the myths you have heard about bankruptcy. With 30 years of experience in Chapter 7 and Chapter 13 bankruptcy cases in southwest Missouri, we can help you find a fresh start. Start by scheduling a free consultation. You can call us at 417-862-3706 or visit us online to learn more.