Understanding the basics of bankruptcy is crucial if you are considering filing for bankruptcy. Usually, people choose to rush to the internet to search for information or to ask a friend or family member for advice. Unfortunately, sometimes the information you find on online discussion forums or the advice your friends and family members share with you is not always accurate.
Some creditors also ensure they feed debtors with misinformation to prevent them from filing for bankruptcy. If you are not careful, you might choose to forgo an opportunity for you to recover financially because of a fallacy. Do not let fallacies stop you from filing for bankruptcy.
Here are some misconceptions on bankruptcy;
Misconception 1: Only the Poor and Irresponsible File for Bankruptcy
Both the poor and the rich can file for bankruptcy since financial problems can affect anybody. Filing for bankruptcy doesn’t have to be about financial choices, with the top reasons why people file for bankruptcy being unemployment, divorce, and severe ailments. Hospital bills can overwhelm you, leaving you in a situation where you cannot pay back creditors. The divorce process also financially drains people because of the legal fees involved.
Misconception 2: Married People Must File for Bankruptcy Together
The above only applies to spouses that share debts. If only one is in debt, then the one without debt does not need to file for bankruptcy. In a situation where the two share a debt, filing for bankruptcy together is the right choice, because if one does not file, they might face harassment from creditors demanding payment.
Misconception 3: You Are Allowed to File for Bankruptcy Only Once
Financial hardships occur more than once in a person’s lifetime. Due to that, the law allows you to file for bankruptcy more than once. For a chapter 7 bankruptcy, you have the right to file a second petition after eight years. Filing a second petition before the end of eight years will force the court to deny you a discharge. For a chapter 13 bankruptcy, you need to finish making payments as per the agreed plan before you can file again.
Misconception 4: Bankruptcy Will Permanently Ruin Your Credit Score
The opposite of this is true. When you owe people, they list you with reporting agencies. When you are listed with these agencies, your credit score is at its worst. When you file for bankruptcy, creditors can no longer report you, since the court legally discharges your debt. Therefore, you have the chance to improve your credit rating after filing for bankruptcy.
Indeed, your credit report will show the bankruptcy for some years (mostly 10), and this is what many people fear. However, many creditors understand that bankruptcy is not a sign of irresponsibility, nor is it a sign that someone refused to pay off debt intentionally. Therefore, as long as you manage your credit cautiously, most creditors are willing to overlook the fact that you filed for bankruptcy at one point in your life.
Reach Out to Us to Learn All the Facts About Bankruptcy
In case you have heard or read some things about bankruptcy and are no longer sure whether some of the information was accurate or not, you need to consult a professional. Ensure you learn all the facts about bankruptcy by contacting a qualified Jupiter bankruptcy attorney at the law offices of Julianne Frank, Esq. or call (561) 220-2528 for a free consultation today.