The social stigma associated with the bankruptcy is due to the misconception, lies, and rumors spread about its filing. Most of the criticism is false and generally designed by creditors to frighten and confuse the people under debt.
Bankruptcy is not known to most of the people and it’s a natural behavior of humans to get scared of the things they are unfamiliar with. With the help of a bankruptcy attorney, you can have a better understanding and guidance in order to get relief from your debts, having a fresh start for your finances.
Let’s see the common myths about bankruptcy that has tarnished its reputation:
Everything you own will be lost
Most of the cases filed under Chapter 7 are ‘no assets’ meaning the debtor will lose no possessions. Though laws vary from state to state, it has exemptions that protect your assets such as house, car, and clothes, and the things, which are non-exempted usually, are not wanted by the creditors. Further, with Chapter 13, you can save your assets by figuring out a repayment plan.
All debts will be discharged
Bankruptcy will help you discharge unsecured debts such as credit card bills, personal loans, utility bills, medical bills among others, but not all of your debts can be relieved by this. Debts arising from child support, family support, student loans, and activities for which you are personally responsible like penalties, are not discharged by bankruptcy.
Permanent ruining of credit
Your credits cannot be completely terminated by bankruptcy under any situation. As soon as the debt is discharged, you are likely to receive credit offers within weeks, granted those cards will be low limit secured cards. The filing for bankruptcy remains in your credit for seven to ten years, but this does not mean that it will be permanent.
Considered as a personal failure
People mistook bankruptcy to be a character flaw and that the debtor is financially irresponsible rather than considering it as a financial remedy. In fact, the greatest numbers of bankruptcies are caused by illness, job loss, and divorces.
The well-intended Americans are forced to choose the path of bankruptcy because of the high medical cost deductions that have increased seven times than the wages; the unemployment rate which is higher than ever; and the legal fees and support associated with the proceedings. Therefore, bankruptcy is more off a cause from an unhealthy economy and healthy wages rather than poor financial judgment.
Many people would be far off by filing bankruptcy early, but the fear of bad image worsen their cases more, which leads them to a bigger crisis in their life. Whatever may be the reason, bankruptcy is a powerful tool that can help you mend your finances.
Married Couple must file bankruptcy together
It is not a requirement by law for both husband and wife to file for bankruptcy together, though it makes sense for both of them to file if they both owe the debt, saving a lot of money for themselves.
Really hard to file for bankruptcy
Not at all, if you file with an experienced bankruptcy attorney who can guide you effectively through the discharge of debts and protection of your assets. Filing for bankruptcy involves tedious paperwork, which can be messed up if not done by the legal aid. Moreover, lawyers can help you in negotiating with the creditors and the trustees.
Now that the bubble has been busted, it can be said that bankruptcy is the best option for people in debt to vent out the stress and get a refreshing financial onset in their lives.