Don’t Let Bankruptcy Myths Stop You

On behalf of Law Office of Paul Mankin posted in Consumer Protection on Tuesday, December 13, 2016.

If you’re dragging your feet about filing for personal bankruptcy, maybe it’s because you’ve heard negative things about it. Bankruptcy gets a bad rap, which doesn’t make a lot of sense, given that it’s a financial tool designed to help people.

At the same time, some people get the impression that bankruptcy will solve all of their problems and leave them solvent for life. They won’t owe a penny and can just start over with a clean slate. That isn’t true, either. So what is?

Destroying the myths surrounding a bankruptcy filing is an important step in helping you move forward. Trying to manage debt without the appropriate tool is kind of like trying to open a locked door without a key. You won’t get far.

What are some of the myths? Well, you might think that… 

1. Once you file for Chapter 7 bankruptcy, all your debts will vanish with a loud “Poof!” Nope. You’ll still be responsible for certain things like: alimony, child support, student loans and any debts due to fraudulent activity (not pointing any fingers here).
2. You’ll lose everything and be penniless and homeless. No, you won’t have to turn over all of your belongings. Some assets are protected, like your house, your car, clothing-the essentials and more.
3. Credit cards and loans will be impossible. No, you won’t have to pay in cash for the rest of your life. You will have to rebuild your credit first and be patient, but you’ll be able to borrow again someday.
4. Filing for bankruptcy means you’re a loser. Nope. People usually come to the decision that they need to file for bankruptcy after a series of setbacks. Yes, you may have run up debt, but that’s likely due to major issues like losing a job, suffering an accident or long-term illness, or going through divorce. Filing is a smart choice when you’re stuck with high medical debt that you can’t see ever being able to repay.
5. Everyone will know. Quite the opposite, actually. Nobody will know, unless you’re a major rock star or other celebrity. While it’s true that sometimes your filing could appear as a public legal proceeding, who would be reading that obscure page or site, anyway? Nobody you know. And even if somebody nosey did find out, all they’re really discovering is that you’re acting in a completely responsible way. You’re using a tool to fix your financial situation.

Now that you’re armed with more truth than rumor about bankruptcy filings, it’s a good time to contact an attorney and get started. The sooner you file, the sooner you’ll be moving forward.