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3 myths about bankruptcy

On Behalf of | Jun 5, 2023 | bankruptcy |

Bankruptcy can offer a fresh start for your finances. It can save you from lawsuits and endless calls from creditors. However, you should obtain adequate information about bankruptcy since it’s associated with many myths. This guide debunks three of them:

Bankruptcy permanently affects your credit score

Undoubtedly, when you are in debt, your credit score will lower. You will lose some points in bankruptcy. However, this is not permanent. When you bounce back financially, your credit will increase. Your points will rightfully be added based on your actions.

Some people believe their credit will be permanently affected. So, they avoid filing for bankruptcy, getting into more trouble. But this is not a wise move. You should file for bankruptcy since you can improve your credit score, generally within less than 2 years.

You will lose everything

Filing for bankruptcy won’t leave you without anything. You will keep some or all of your assets, depending on the type of bankruptcy you file. For instance, with Chapter 13 bankruptcy, you will make plans to repay your debts and, in turn, keep your assets. With Chapter 7, you may liquidate nonexempt asset, but most if not all are protected.

Filing means you are irresponsible

Some people believe filing for bankruptcy means they made irresponsible choices. But this is not true. You can get into debt because of medical expenses or changes in the market that lead to losses in your business. Any hard-working, responsible person can find themselves in a difficult financial situation. In fact, taking the step to file for bankruptcy is a brave move and generally relieves stress enormously.

Obtaining the right information is crucial when you want to declare bankruptcy. It can also help to get legal guidance to make the right moves.