If you fall on hard times financially, it can be difficult knowing what to do for the best. Bankruptcy is one possible option but it’s a major decision that requires careful consideration. It’s important that those thinking about this financial route are offered accurate information on the subject.
Unfortunately, there are many misconceptions in circulation that can cloud a person’s judgment on this issue. Outlined below are a few misunderstandings about bankruptcy it’s important to clear up:
1. Myth: Bankruptcy means you’ve been careless
Sometimes, those who file for bankruptcy can be stereotyped as people who have been careless with money. This is simply not accurate though. Millions of Americans are currently struggling financially through no fault of their own. All it takes for some to fall on hard times is one unexpected medical bill, a family emergency or a natural disaster.
2. Myth: Your credit is ruined for good post-bankruptcy
It is true that bankruptcy will have an impact on your credit rating. However, this does not last forever. By paying your bills regularly and on time you can see your credit rating start to improve again. Eventually, the record of bankruptcy should disappear from your credit report completely.
3. Myth: Bankruptcy eliminates all debt
While bankruptcy will discharge many of your debts, there are some exceptions. Child support obligations cannot be removed through bankruptcy. Additionally, bankruptcy is not likely to discharge any student loan obligations that you have as well as most tax debts.
While bankruptcy may be a valid solution to your situation, it’s important that you are armed with all of the facts first. Having experienced legal guidance behind you will also ensure that you’re making decisions based on your own best interests.
