From credit card companies to online financial bloggers, the plethora of sources tossing out information about Bankruptcy can be confusing and sometimes just down right absurd. Even if their intentions are good the impact can be bad. These are five popular bankruptcy myths that can cause a great amount of damage.
Myth One: People who file for bankruptcy are financially irresponsible. Despite this myth being completely untrue it has a very damaging effect. For some, the shame of being labeled financially irresponsible is too great to bear and in turn they avoid filing for bankruptcy resulting in further financial trouble. The reality is, most bankruptcy filer’s financial troubles arise from crazy interest rates combined with circumstances beyond their control, i.e. a medical problem, the job market, divorce, etc. If you need to file for bankruptcy, or if you have, keep in mind these two things: one, even if you have room for improvement, this is not your fault. Two, you are not alone. At Roy & Associates, P.A. we understand that bankruptcy is a complex situation involving many aspects and emotions. Let us help you through the complexities of it all.
Myth Two: Bankruptcy frees you of all past debt. As nice as this sounds, and as freeing as bankruptcy can be, this myth is simply untrue. Unfortunately, there are certain types of debt that cannot be erased in bankruptcy. Additionally, based on if you file for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy the list of dischargeable debts will differ between the two. However, a general list of the kinds of dischargeable debt includes: alimony, child support, certain taxes, specific student loans, court fines/penalties, etc. To learn more about what kinds of debt are dischargeable and what kinds of debt are not dischargeable call our experienced Bankruptcy attorneys at Roy & Associates, P.A.
Myth Three: Bankruptcy permanently ruins credit, or at least for 10 years. Fortunately this myth is a total lie. Unfortunately, this is one of the most popular and awful myths regarding bankruptcy. Some law firms, debt solutions companies, and credit card companies would love nothing more for you to believe this because it means more money for them. At Roy & Associates, P.A. we want you to do what’s best for YOU. The reality is, yes bankruptcy can stay on your credit report for up to 10 years BUT after a few years it does not matter. In fact, most people within MONTHS of discharge can get a secured credit card and an unsecured card after another few months. In some instances, bankruptcy actually improves your credit, as it looks better than defaults or late payments.
Myth Four: You’ll lose everything you have. This is a very scary thought for anyone to have and one that can easily prevent a person from filing for bankruptcy. The good news is that this myth is also a lie. Although the bankruptcy laws vary state to state, there are specific assets that are protected. These assets include your house, your car (depending on value), certain retirement plan money, household goods, and clothing. We promise that if you give us a call to help you get started with your bankruptcy case that you won’t lose the shirt off your back and be forced to go live in a cardboard box, give it a shot.
Myth Five: You’ll lose none of your property. As you just learned (from Myth Four) you’re not going to lose everything when you file bankruptcy, but conversely (and sadly) you’re not going to keep everything either. The myth that you won’t lose anything in bankruptcy is especially false for those who have excess assets. For example, if you are filing Chapter 7 Bankruptcy and you have something that is unnecessary and expensive such as an RV, and it is paid off, then you may be demanded to sell it and apply the proceeds to your debt. However, even if it means losing a prized possession it is extremely important to disclose all of your assets. Trust us, attempting to hide an asset to prevent seizure will get you in a lot of trouble.
In the end, it’s clear to see that there is a lot of misinformation out there regarding Bankruptcy. Instead of stressing and trying to determine what’s true and what’s not, call our experienced West Palm Beach bankruptcy attorneys at Roy & Associates, P.A. We’ll be by your side aggressively representing and guiding you throughout the whole process.
The article above is intended for educational purposes only and should not be considered legal advice. If you need legal advice, contact an attorney.