What Are Some Misconceptions About Bankruptcy?
When it comes to bankruptcy, there are a lot of misconceptions about why people typically need to file for bankruptcy. There are also misconceptions about what portion of their debt can be discharged, as well as the repercussions to their credit score. The following are some of the most common bankruptcy misconceptions. Then, our bankruptcy lawyer gives the factual explanation of what is really the case:
Myth #1: People who file for bankruptcy are reckless spenders.
This may be the case for some people. However, for the most part, people who file for bankruptcy are often dealing with some other expensive crisis. Or they may be dealing a big change in their life. Such as divorce, crippling medical bills due to illness or even persisting unemployment. The Bureau of Labor Statistics reports that approximately 5.2 million Americans had been out of work for at least 6 months as of April 2012. Yet, the Center for Disease Control estimates that roughly 1 in every 5 Americans has the burden of medical bills that they cannot afford to pay.
Myth #2: All debts acquired before filing for bankruptcy will be discharged.
Much of acquired consumer debt will be discharged. However, you cannot wipe clean debt such as tax payments, child support or court-ordered restitution fees for those who have committed a crime from your financial slate. Additionally, those who know they will be filing for bankruptcy and run up their credit cards beforehand can face charges of fraud. They will be responsible for this debt.
Myth #3: Filing for bankruptcy will damage your credit permanently.
This is simply not true. After filing for bankruptcy, debtors can start slowly rebuilding their credit by applying for a secured credit card. Then by subsequently making the monthly payments on time, they can improve their credit score.
An Experienced Bankruptcy Lawyer Can Clear Up These Misconceptions
If you’re considering filing bankruptcy, take a moment to write down all your questions and concerns. When our Phoenix bankruptcy lawyers sits down for your no-cost consultation, we’ll be happy to help you separate fact from fiction.