There are many myths about bankruptcy that prevent individuals or businesses from filing. Instead, they endure stressful financial hardships due to false perceptions made up about bankruptcy.
An article published by Susan Johnston from US News examines common myths about bankruptcy, and why these made up fictions stop people from filing.
1. If you file for bankruptcy, you are financially irresponsible. Not true. There are many obstacles people endure in life that will lead to financial hardships, and the need to file for bankruptcy.
Being unemployed for a long period of time, experiencing a divorce, running a household as a single parent, and having expensive health insurance are all major contributors to why people have to file for bankruptcy. These reasons do not reflect one’s responsibility or irresponsibility with their finances.
2. Filing for bankruptcy discharges all past debts. Not always the case. Without the help of an experienced bankruptcy attorney, not all debts may be discharged.
Specific debts such as child support, alimony, and student loans fall into their own categories, and it is very difficult to discharge these debts – especially without legal guidance.
3. You can go on a spending spree before filing for bankruptcy, and you won’t have to pay that money back. False. It is a common assumption that all debts will be discharged when you file for bankruptcy.
It is common practice that individuals max out their credit cards right before filing for bankruptcy in hopes of those debts being discharged. Not anymore.
Courts have ruled this as fraud, and fraudulent charges cannot be discharged. Maxing out your credit cards before filing for bankruptcy is not looked highly upon.
If you find yourself in a situation where your spending reflects this idea, it is important to seek legal representation from an experienced bankruptcy attorney in Maryland to represent your case.
When you successfully file for bankruptcy with the help of an experienced bankruptcy attorney, your credit is a blank slate.
4. Bankruptcy ruins your credit. Completely false. When you successfully file for bankruptcy with the help of an experienced bankruptcy attorney, your credit is a blank slate. You are given a fresh start to your finances, and life.
Many people begin receiving credit card offers in the mail just one month after filing for bankruptcy. To a creditor, your credit is clean and they are eager to help you build your credit score. You are a desirable candidate because you have no visible outstanding debts.
5. Bankruptcy cures all. Sometimes. Without the help of an experienced Maryland bankruptcy attorney, you may face the possibility of losing your home, or other valuable assets, or find yourself in a repayment plan that you cannot manage.
With legal consult, you can decipher if filing for Chapter 7 or 13 is beneficial for your specific needs. Often times, individuals file for the wrong chapter of bankruptcy, and find themselves in more difficult financial hardships than before.
For Susan Johnson’s full article, click here.
