What Are Common Myths About Filing For Bankruptcy?

Posted on August 19, 2015 at 12:00pm by

Many people see bankruptcy in only a negative light, but that is because several misconceptions and myths are perpetuated by our culture. In some cases, these myths can keep people from filing for bankruptcy when it could truly help resolve difficult financial situations.

  • There is a stigma in our society about bankruptcy and the people who file it. This stigma is unfair and wrong. Many people file for bankruptcy because they are facing situations beyond their control, such as medical bills from serious illnesses, a poor economy, being laid off or divorce. Excessive medical bills are very common among bankruptcy filers.
  • Many people who are considering filing for bankruptcy are worried their credit will be tarnished forever. There is no such thing as a “permanent” credit score, and it is possible to rebuild good credit. Taking baby steps and making small payments on time for several months can rebuild credit ratings.
  • A common myth is that people who file for bankruptcy will lose all of their possessions. This depends on whether someone is filing for Chapter 7 or Chapter 13 bankruptcy, as well as any exemptions. In Chapter 13 bankruptcy, debts may be reorganized so payments become easier for debtors. With timely payments, it can be possible to keep houses and cars.
  • People sometimes see bankruptcy as “life-ruining”. On the contrary: not filing for bankruptcy can be even more life-ruining! Debts can pile up to a point where they become unmanageable. Instead of risking further defaults and damage to credit, bankruptcy can eliminate some debts to make paying ones that are more important easier.

What Is The Truth About Filing For Bankruptcy?

Bankruptcy may seem like a scary word, but it is nothing to fear. Look at it as an opportunity. Filing for bankruptcy does not mean your life is over: it can mean a second chance or new beginning.

The Sader Law FirmKansas City Bankruptcy Attorneys