3 Common Bankruptcy Myths Debunked
Unfortunately, as much as the many benefits of financial relief that bankruptcy has offered and continues to offer many people, some still have many negative opinions about filing for bankruptcy relief. However, even though some people have negative perceptions about bankruptcy, some things people say or write about bankruptcy are simply false.
Deciding to file for bankruptcy is usually a daunting experience for many, and misconceptions only make matters worse. Regrettably, many have let go of the idea of filing for bankruptcy because of fallacies. As a result, many individuals have missed out on the opportunity to receive the financial relief that bankruptcy offers.
If you are considering a Pennsylvania bankruptcy, then you should know that you will most likely come across different myths from friends, family, the internet, and even strangers. You probably already have come across some bankruptcy myths, but you don’t know that you have since differentiating myths from facts is not that easy.
This article is meant to debunk some prevalent bankruptcy myths. Generally, while there are countless bankruptcy myths out there, some are more prevalent than others. In this article, we expose three of the most prevalent bankruptcy myths.
Myth #1: Bankruptcy Ruins a Person’s Credit Forever
Truth: Indeed, filing for bankruptcy means that your credit score may take a hit. For many Filers, they have already have low credit scores from debt collectors reporting delinquent accounts. Filing for Bankruptcy puts a stop to future delinquent credit reportings by creditors/debt collectors whose debt is going to be discharged and are barred from negatively reporting on your credit reports after filing for bankruptcy by the automatic stay.
Bankruptcy does not stay on your credit report forever. Usually, a Chapter 7 bankruptcy remains on a filer’s credit report for ten years, whereas a Chapter 13 bankruptcy remains on a filer’s credit report for seven years. This means that with a Chapter 13 bankruptcy, your bankruptcy will come off your credit report much sooner.
Although bankruptcy can stay on your credit report for up to ten years, it is important to note that you can rebuild your credit and achieve a good score after filing for bankruptcy. In fact, within 18 months after filing bankruptcy and provided you are making payments on loans or paying off your credit cards you obtain after your filing, many Clients have greatly improved their credit score from where it was immediately before they filed.
Myth #2: Filing for Bankruptcy Means that You Are a Failure
False: Contrary to popular opinion, most people who file for bankruptcy are not financially irresponsible. In fact, according to studies, most bankruptcies are caused by things that are out of people’s control. Most people file for bankruptcy because of issues such as job loss and overwhelming medical bills. Not many people file for bankruptcy because of mismanaging money.
Myth #3: Everyone Will Know You Filed for Bankruptcy
Truth: Indeed, bankruptcy records are public records. However, the people that are most likely to find out that you filed for bankruptcy are those people you approach in the future for credit. Your neighbors and family are not likely to know that you filed for bankruptcy unless you tell them or you are a celebrity.
Apart from myths that cause some people to let go of the idea of filing for bankruptcy, myths that lead to people filing for bankruptcy for the wrong reasons exist. Some of such myths include;
- Chapter 7 bankruptcy eliminates all debts.
- Bankruptcy helps people solve all their financial problems.
It is important to note that not all debts can be eliminated in a Chapter 7 bankruptcy. For example, you cannot eliminate child support or spousal debts in a Chapter 7 case.
Contact Us for Legal Assistance
If you need help deciding if you should file for bankruptcy or which bankruptcy chapter to file, it is vital that you consult a qualified attorney. For professional advice or help with your bankruptcy case, contact a qualified Lehighton & Carbon County bankruptcy attorney today on 570-818-4888 to schedule a consultation.