Financial setbacks are among the most difficult challenges people face. If you are considering bankruptcy, you may be struggling with anxiety, confusion, guilt, and even depression. However, with competent legal guidance, the bankruptcy process can go smoothly, and you can regain financial security.
Unfortunately, misconceptions about bankruptcy run rampant, and they may be increasing your confusion and anxiety. The first step to getting your life back on track is getting the facts.
Three of the Most Common Myths About Bankruptcy:
1. Myth #1: Filing for Bankruptcy Means You Have “Failed”
This is definitely not true. If you are considering bankruptcy, you’re making a difficult choice so you and your family can recover from financial trouble. This decision is probably your last resort. Bankruptcy exists to give people facing financial hardships a “fresh start.” It should not be construed as a failure or evidence that you are irresponsible.
Furthermore, many unavoidable circumstances, such as illness, long-term unemployment, or divorce, cause bankruptcy. If you find yourself in this situation, you are not alone. U.S. News and World Report found that:
- In April, 2012 more than 5.2 million Americans had been unemployed for six months or longer. (Bureau of Labor Statistics)
- In 2011 20% of American families had faced problems paying medical bills in the past year. (Centers for Disease Control and Prevention)
Many honest, hardworking people file for bankruptcy — for myriad reasons — and it no longer carries the stigma it once did.
2. Myth #2: When You File for Bankruptcy, You Will Lose Everything
This is also untrue. Every state has exemptions to protect certain assets — such as your house, car, and family heirlooms — from creditors. We often see “no asset” cases in which the debtor keeps everything he owns. To determine what property you’ll be able to keep, consult a qualified attorney about laws in your state.
2. Myth #3: Bankruptcy Will Permanently Ruin Your Credit
In the long run, bankruptcy is likely to do less harm to your credit than continuing to struggle with unresolved debts. If you have reached that point, you probably have low credit ratings due to debts and unpaid bills. Bankruptcy gives you the chance to eliminate old debt so you can start rebuilding your credit.
When you file for bankruptcy, it can stay on your credit report for up to ten years. However, after a few years, many lenders give it less weight. Many people who have filed for bankruptcy go on to achieve high credit scores and own homes.
To discuss your particular situation, seek the advice of a highly qualified, seasoned attorney in your area. Here in Tampa, Florida, if you need a skilled chapter 7 lawyer, Savage, Combs, & Villoch is here to help. Please contact us to explore your options.