4 Bankruptcy Myths and Facts

If you are looking for a way to get rid of debt, filing for bankruptcy may be the right option for you. As a highly qualified bankruptcy lawyer like one from The Law Offices of Neil Crane knows well, there are many advantages to filing for bankruptcy that many people are not aware of. In some cases, it is actually the most sensible and advantageous solution for individuals with large amounts of debt. The many misconceptions about bankruptcy and its effects can be detrimental because it deters people from seeking it out as a viable option. Some common misconceptions about bankruptcy as described below.  

Bankruptcy is a personal failure 

A prevalent myth about bankruptcy is that filing for bankruptcy implies personal and moral failure. This is far from true. A person can face unique and extraordinary circumstances that may force them to file for bankruptcy. Most people who file for bankruptcy are financially responsible and have sought multiple ways to keep their debt in control. However, unforeseen circumstances commonly can result in a bankruptcy filing. Sometimes a sudden economic change or unexpected debt complications can damage a person’s finances. 

My credit score will be permanently ruined

It is true that bankruptcy will have a strong impact on your credit score, however it is not a permanent change. Your credit score will be lower initially after beginning the bankruptcy process, but you can expect to see this increase slowly over time. You may even see your score begin to recover a few months after filing. Once you are cleared of your debts, you can achieve a higher score than your previous one. 

I have to sell my house and possessions

You do not have to give up your house and possessions if you file for bankruptcy. Homeowners are able to keep their house and assets. It halts all repossession and foreclosure. Debt collectors are not legally permitted to seize your home or collect any debts. This is known as an automatic stay. Regardless of the type of bankruptcy that you file under, your assets will remain safe and secure. 

There is no way to recover after bankruptcy 

Bankruptcy does not leave you in financial ruin. It actually allows individuals to have a clean slate and obtain a financial fresh start. During the bankruptcy process, you need to take a creditor counseling course, where you learn about money management basics and list your assets. You will gain a better sense of your finances and strategies to prevent you from running into future debt issues. 

For more information about bankruptcy and debt relief solutions, contact a top bankruptcy lawyer near you.