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Three misconceptions about filing for bankruptcy

| Sep 22, 2020 | Bankruptcy

Maybe you’ve come across a medical emergency that has caused you debt or your recent unemployment has caused your credit card statements to pile up. In either case, filing for bankruptcy may offer a sense of relief.

When you are hoping to keep creditors at bay or simply stay afloat during a financially difficult period in your life, you shouldn’t overlook bankruptcy as an option. In fact, there’s probably little to no truth that to some of the myths or negativity you’ve heard about bankruptcy.

Here are three misconceptions to consider:

  1. Bankruptcy will take care of all debt

Unfortunately, bankruptcy doesn’t cover all types of debt. Three types of debt that you probably won’t be able to eliminate after you declare bankruptcy are those related to taxes, child support and alimony payments. Student loan debt isn’t typically dischargeable either. Whereas, you can likely receive relief when it comes to medical, credit card and personal loan debt.

  1. You’ll never be able to repair your credit

Thinking of a bankruptcy as temporary aid is more realistic than thinking it will ruin or dictate your financial situation forever. The fact of the matter is bankruptcy won’t do good things to your credit score, but bankruptcy can buy you time to address loans instead of falling further into debt. Seeking approval for loans or credit cards won’t be impossible forever.

  1. It’s only for people with big money problems

You are not alone in filing got bankruptcy. In fact, bankruptcy filings have been on the rise for about a century in the United States. Plus, most cases involve individuals rather than businesses who only make up about 3% of all cases. You might feel like your world is crashing down, but you should just view bankruptcy as an opportunity rather than some sort of trap.

However, since filing for bankruptcy comes with its own costs, it’s important to speak with an experienced attorney to learn if you will reap the benefits.