As experienced bankruptcy lawyers in St. Petersburg, we have heard many strange and false misconceptions about bankruptcy and the bankruptcy process. Our team at Boss Law wants to set the record straight on a few of these myths and hopefully make those considering bankruptcy a little more knowledgeable about what our firm does and how bankruptcy can benefit them.
Here are four myths about bankruptcy:
1. Filing for bankruptcy means that you failed.
This could not be more false. Statistically speaking, about 57% of bankruptcies in 2009 were the result of medical costs and bills. In the past eight years, medical costs have increased seven times faster than wages, meaning that even more people are unable to pay for their care. These people did not file for bankruptcy as a result of a failure.
No matter what your reason is, bankruptcy does not mean that you are a failure. It is a system designed specifically to help people take back control of their finances.
2. You will lose all of your belongings.
Bankruptcy is a system designed to help, not punish. Many people believe that bankruptcy will force them to lose their home, their car, and other belongings, but that is untrue. In many cases, bankruptcy helps you keep those things.
Most Chapter 7 bankruptcies are no-asset cases, meaning that the person who filed for bankruptcy doesn’t have to give up their possessions in order to get out of debt.
3. Bankruptcy will forgive all of your debt.
Bankruptcy will provide relief for your debt, but there are exceptions to what forms of debt will be forgiven. Debt types that are usually not forgiven include student loans, child support, spousal support, tax debt, or debt as a result of fraud.
4. Bankruptcy will ruin your future.
It is true that as a result of bankruptcy you will more than likely have to pay higher interest rates and have limited access. Bankruptcy will remain on your credit report for 10 years, but that doesn’t mean your financial future is ruined because of bankruptcy.
In most situations, credit scores tend to increase when the bankruptcy process is finalized. There are also other ways to build your credit post-bankruptcy, giving you hope for the future.
For more bankruptcy advice and answers, contact Boss Law and schedule a consultation!