Common Bankruptcy Myths
Are you currently dealing with a lot of stress as a direct result of your monthly obligations and out of control debt? If so, you may be considering your options, one of which may include bankruptcy. But, if you have heard some of the bankruptcy myths circulating around, you may be hesitant to take the plunge.
At K² Legal Services, our bankruptcy attorney has been serving clients throughout the Charlotte area. We are intimately familiar with the Bankruptcy Code and would be more than happy to debunk any bankruptcy myths you might have heard over the years.
Below, you will find some of the most common bankruptcy myths:
- People who file for bankruptcy are irresponsible with money. While there will always be a percentage of filers who couldn’t resist the temptation of their credit cards, most people file for bankruptcy for perfect valid reasons; for example, a job loss, a divorce, or a serious illness.
- Chapter 7 bankruptcy discharges all past debts. Don’t we wish! While a Chapter 7 can wipe out certain unsecured debts such as credit card debt, medical bills, personal loans, and past-due utility bills, it cannot discharge the following debts: child support, spousal support, student loans, victim restitution, certain taxes, and court-ordered fines.
- Bankruptcy will destroy my credit permanently. People are often surprised how soon they begin getting credit card offers in the mail following a discharge. Contrary to popular belief, a debtor can rebuild their credit score into the 700s well before the bankruptcy falls off their credit if they follow a few simple credit rebuilding tips.
- I will lose everything that I have. If you have a nice wedding ring, or another personal possession of some value, know that this is a common misconception that keeps people from filing for bankruptcy when they should do it. While the bankruptcy laws vary from state to state, every state has “exemptions” that protect certain assets such as a home, an automobile, tools of the trade, household goods and clothing. Most people will pass through bankruptcy keeping everything that they have.
- You can only file for bankruptcy once in a lifetime. You can file for Chapter 7 bankruptcy once every eight years.