4 Common Myths About Filing For Bankruptcy
For borrowers who have found themselves facing certain types of financial issues, bankruptcy can be an effective method to help get rid of debt and find a path toward financial freedom. However, that doesn’t mean that evaluating whether to begin navigating through the process is a simple undertaking, especially because there are so many myths surrounding how bankruptcy works. Everyone from family members to beloved friends can offer well-meaning advice about your financial options that – while not intentionally wrongful – is still based on misconceptions. Despite the historical stigma, bankruptcy helps resolve debts in a legal and structured way so it is important that facts offset these misconceptions. Let’s discuss four common myths about personal bankruptcy.
- Only Financially Irresponsible People File for Bankruptcy
This is perhaps the most widespread misconception of them all. While creditors love to push the image of debtors who get into financial trouble because they are swiping credit cards for frivolous purchases, the reality is that bankruptcies are filed for a wide variety of reasons and many of them are linked to factors that borrowers could not have directly controlled. It cannot be emphasized too many times that the most common reason that borrowers file for bankruptcy is actually due to debt incurred in relation to medical care.
- Bankruptcy Means a Lifetime of Bad Credit
It may be true that you should expect a lower credit score for some time due to filing for bankruptcy. However, in contrast to this myth, filing for bankruptcy typically results in an eventual improvement in both your credit score and your ability to obtain financing in the future due to the fact that the bulk of your debts will be resolved.
- Filing for Bankruptcy is Free
It may also seem strange to think that there are charges associated with filing for bankruptcy since being in the position of petitioning for one obviously means that there is financial trouble present. However, filing for bankruptcy comes with numerous expected costs including court fees and attorney fees.
- Every Debt Can Be Discharged With Bankruptcy
Unfortunately, not every debt is considered dischargeable. Obligations such as student loans and child support payments are examples of those that are not typically included in a bankruptcy petition – although there are certain exceptions to this. The other part of why every debt is not dischargeable is that every kind of bankruptcy does not work the same way. While debt may be completely wiped out with Chapter 7 bankruptcy, for example – Chapter 13 bankruptcy results in an entirely different outcome and means that you will pay back some, if not all, of your debts.
We Can Help You Understand the Bankruptcy Process
While making the choice to file for bankruptcy can inherently be a very difficult decision, one of the most difficult parts of this is the fact that the bankruptcy process can be complex to navigate through.
As the Plantation bankruptcy attorneys at Nowack & Olson, PLLC, we have a passion for ensuring that the borrowers who entrust us to assist them understand all of the options available to them and how bankruptcy can be an advantageous solution. We can help you separate myths from the truths that are relevant to your personal situation while supporting you throughout the bankruptcy process. The road to financial freedom starts when you reach out to us for a complimentary consultation.