Just saying the word feels taboo – “Bankruptcy” [shivers] – but filing bankruptcy isn’t a topic that should avoid discussion. Years of bad publicity have framed it as a way out, or the mark of fiscal irresponsibility. However, in certain situations, it may be the most responsible thing you can do!
But first, you must know more about it. We’ve already broken down the difference between Chapters 7, 11 and 13 bankruptcy, now let’s bust some myths that have become all too common about filing bankruptcy.
Myth: Filing bankruptcy will eliminate all my of my debt.
Fact: Certain debts can be completely eliminated, but others may remain, depending on the type of bankruptcy you’ve filed for. Generally speaking, filing for bankruptcy is ideal for freeing you of unsecured debts (medical bills, student loans, credit cards, etc.). However, you may still be on the hook for any secured debt that you owe.
Myth: Filing bankruptcy will ruin my credit.
Fact: Yes, filing for bankruptcy will be a knock on your credit score, but you can’t live in an alternate reality forever. Think of it as officially acknowledging which steps you will need to take in order to rebuild that glorious number. Filing is step one and should be viewed as vital to regaining your former glory. In essence, it will begin rebuilding your credit, not ruining it; depending on which chapter you file for the extent of the damage may even vary.
Myth: Bankruptcy can only be filed once.
Fact: We’re not advocating that you become the king of bankruptcy, but sometimes life happens. Just because you have previously filed for bankruptcy does not mean that you are ineligible to file again. Depending on which chapter you filed for, and how long ago, you may be able to do so.
Myth: Filing bankruptcy is expensive.
Fact: The cost is dependent on the type of bankruptcy filed and, without an attorney, can range anywhere from $300 – $500. However, this may ultimately cost you more if you have no knowledge of how bankruptcy procedures actually work. We always recommend seeking out a knowledgeable and seasoned attorney. This raises the average cost to somewhere between $1,500 – $4,000. But remember, paying the attorney fees up front may save you much more money in debt cleared, and procedural fees for what you messed up down the road. Contact our favorite attorney, Peter Wittlin, and receive a consultation today.
Myth: Filing bankruptcy is for scam artists and frauds.
Fact: Filing bankruptcy is actually quite a responsible thing to do if you can’t pay the bills and are finally out of options. It is the first step on the road to financial recovery and can salvage relationships with family and friends. Although the system is capable of being manipulated by ill-intentioned individuals, the majority of people who file bankruptcy are hard-working, honest individuals who have run into some bad luck.
We hope you found this useful. Don’t let the taboo of bankruptcy caution you from learning more about it.
Do you think filing bankruptcy may be your best option? Would you like more details about our expertise and what we can do to address your specific needs? Contact us today!