Bankruptcy can be an option for some people that may save them from extreme financial burdens. However, false beliefs from bankruptcy myths may keep someone from turning to bankruptcy when they need it most. Dispelling these myths can help someone in need make the right decision about their future.
Despite the myths surrounding bankruptcy, more than 700,000 people file for bankruptcy every year. If hundreds of thousands of people can look past the false stories surrounding bankruptcy every year, so can you. Take a look at these myths that can keep you from applying for bankruptcy:
Bankruptcy discharges all debt
No matter what form of bankruptcy you file for, bankruptcy does not discharge everything. In chapter 7 bankruptcies, the bankruptcy only discharges the unsecured debt, which is a form of debt that does not have any collateral. Typical forms of this debt include credit card debt, medical debt, and debt from utility bills.
Bankruptcy will permanently ruin your credit
While it is true that your credit will take a hit, it is only temporary. Because the applicant now has an extremely low debt-to-income ratio, it may be possible that an applicant receives credit card offers in only a few weeks. Some people can get a credit score back in the 800s in only a matter of months after they discharge their debt.
Bankruptcy is a sign of financial failure
There are many ways someone can get into financial hardship despite their best efforts not to. Sudden medical emergencies, extended job loss, and divorce are all common causes of bankruptcy that someone may not be able to prepare for. More and more people are experiencing these causes, so it only stands to reason that more people will then file for bankruptcy.
Do not believe the myths
False stories and rumors do not have to keep you from making the right decision. If you are considering bankruptcy, consult with a bankruptcy attorney to determine how bankruptcy can help you. The truth about bankruptcy may be what you need to free yourself from financial hardship.