Three Common Myths People Tend to Believe About Bankruptcy

Chapter 7 bankruptcy attorney

In 2013, an estimated 1,071,932 people and businesses filed for bankruptcy — and those are just the numbers for the United States. On top on that, nearly 2 million people were affected by bankruptcies caused solely by medical bills, making medical debt far and away the largest cause of bankruptcy in the nation. That must mean that millions of people throughout America are in hot water, right? That they’ll never be able to build their credit back up or purchase a home? That they’re in danger of losing their possessions forever?

If you believe all that, you’ve likely seen too many fictional portrayals of bankruptcy. That’s because those are just some of the popular myths that tend to get spread in gossip circles like wildfire in a dry forest. In truth, it’s important to understand how to file for bankruptcy in case the situation should ever arise, but it’s even more important to be able to spot the truth. Here are the three most commonly held myths about filing for bankruptcy.

Myth #1: You’ll wreck your credit, affecting future plans to buy a house or a car.

This is probably the most pervasive bankruptcy myth out there, though it’s completely unfounded. First, though, full disclosure: yes, bankruptcy affects your credit score for seven to 10 years after you file. But your credit score is shaped by plenty of other factors, such as how many accounts you have open, how often you pay your bills on time and how often you’ve applied for credit cards (as well as how often you’ve been turned down). Debt and bankruptcy only comprise one portion of your overall credit score.

Myth #2: All bankruptcy is the same, and all bankruptcy is bad.

No and no. Most people file for either Chapter 7 or Chapter 13, and most businesses file for Chapter 11. Through Chapter 7, your bills are liquidated and your assets are sold to pay your creditors. Through Chapter 13, you develop a reorganization plan for payback and may be able to keep your assets. If you’re thinking of filing either one, it’s important to land the right Chapter 7 bankruptcy attorney or Chapter 13 bankruptcy attorney who’s fought (and won) cases like yours before.

Myth #3: Filing for bankruptcy is going to cost more than you can ever pay back.

It seems like a Catch-22, doesn’t it? You have to pay legal fees in order to help clear out your other debts, which in turn could land you even deeper in debt. But paying for your Chapter 7 bankruptcy attorney isn’t that expensive, and it’ll likely cost you somewhere in the $1,000 to $3,000 range — costs you can pay back over time, of course. Talk to your prospective legal team before hiring them to see what they charge.

Unless you’re a business, you won’t have much use for a Chapter 11 bankruptcy attorney, so set your sights squarely on those who handle Chapters 7 and 13. And in the meantime, stop living with the delusion that bankruptcy is going to ruin your life. Get in touch with a Chapter 7 bankruptcy attorney and start living in the real world again. For more, read this link.

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