Bankruptcy is a legal process that can offer individuals a much-needed fresh start when debt becomes overwhelming. However, many people never pursue this valid and viable option because of the bankruptcy myths surrounding the process. In this article, we endeavor to debunk some of the most common bankruptcy myths and give Florida residents the information they need to make informed and intelligent decisions about their future.
- Filing for Bankruptcy Means You’ve Failed: One of the most prevalent misconceptions about bankruptcy is that filing indicates personal failure and is something to feel shame over. This is not true—bankruptcy is a legal resource and tool created to help individuals from all walks of life simply regain control of their finances. Everyone needs a fresh start occasionally. Nearly half a million people file bankruptcy each year, meaning you are far from alone.
- All Your Friends and Neighbors Will Know About Your Bankruptcy: While bankruptcy filings are part of the public record, they are not proactively publicized. In other words, the people in your life are not likely to learn about your bankruptcy unless you share the information with them.
- You Will Lose Everything and Be Rendered Penniless: Many people are afraid that filing for bankruptcy means surrendering everything they own. While there are different types of bankruptcies and situations vary, most people are allowed to retain many of their possessions and assets while eliminating or restructuring their debt.
- Bankruptcy Erases All Debt, No Matter What: While bankruptcy is a powerful way to get out from under overwhelming consumer debt (such as credit card bills), there are some categories of debt that the courts cannot discharge – notably alimony, child support, and tax debts. That said, it is also important to point out that you cannot exclude any information from your filing. Bankruptcy requires you to list all of your debts, and all creditors must be treated equally under the law.
- Your Credit Score Will Never Be Restored: Bankruptcy does adversely affect your credit score, and you can expect your score to drop significantly once you file. However, the situation is not permanent. After your case is resolved, you can begin to repair your credit score. If you are considering bankruptcy, it is probable that your credit score is already suffering. Bankruptcy helps to fix the situation and gives you the opportunity to recover. It will take time, but you can achieve a positive credit score again.
- You Cannot File for a Second Bankruptcy: The law allows you to file for bankruptcy more than once, but there are established time limits between filings. If you have filed for bankruptcy in the past and wish to explore a subsequent filing, it is best to consult with a bankruptcy attorney to understand your eligibility and options.
- Bankruptcy Is the Easiest Way Out/ Bankruptcy is Complicated and Expensive: We combined these two myths because they address the same basic issue. Bankruptcy is a complex legal process that requires an investment of time and accurate documentation. Therefore, it is not a quick and easy fix. However, bankruptcy processes and fees are much more manageable when you have the guidance you need to navigate the process. The best way to approach bankruptcy is with an experienced professional on your side.Understanding the reality behind these common bankruptcy myths is essential for making intelligent and educated financial decisions. Bankruptcy is an invaluable resource for those dealing with overwhelming debt, and you shouldn’t let misinformation dissuade you from investigating your alternatives.
When you set up a consultation with an experienced Sarasota bankruptcy attorney, you position yourself to get the information you need – giving yourself the best opportunity for financial stability.
