No one wants to have to file for bankruptcy. It can be seen as this shameful act and many people are scared of what comes with it. There are roughly 884,956 American households that for bankruptcy each year, but there are still myths about it. Many people try to avoid filing until it is too late to do anything else.
Therefore, talking to a bankruptcy lawyer can make this entire process make sense. Yes, bankruptcy is complicated, and that is where a lot of the fear comes from. It is easy to be cautious of something you don’t understand. It is why the myths started. Below are the most common myths you can find when it comes to bankruptcy and why they simply just aren’t true.
- Bankruptcy Permanently Kills Your Credit
Yes, bankruptcy is going to hit your credit rather hard. You can expect to have access to limited credit for about 7 to ten years following your bankruptcy. However, the effects aren’t permanent. In fact, you are more likely to receive credit card offers within weeks of your debt discharge. Granted, they are going to be secured cards mostly, but it is something.
If you have a good credit score of about 700 or above, you can find your score dropping at least 200 points. If your score is lower, then you could lose anywhere from 130 to 150 points. It really depends on your score, but in the long run, your credit score can bounce back quickly.
- If You Recklessly Spend Right Before Bankruptcy You Won’t Have to Pay That Money Back
Many people fall into believing this misconception. People have this idea that since you’re having all your debt removed in court, it is okay. However, it simply isn’t. You could be facing charges of fraud for going on a spending spree. Not only that, but you could have your entire case dismissed and you won’t be able to do anything about it.
- Bankruptcy Discharges All Debt
Yes, you are going to get discharged from a lot of your debt, but not all of it. The most common ones to get discharged for are things like personal loans, utility bills, credit card charges, medical bills, and back rent for a Chapter 7 bankruptcy. However, things like student loan debt and child support will not be dissolved.
Filing for bankruptcy is hard enough without the myths surrounding it. If you have questions, don’t hesitate to reach out to a lawyer today.