At the Pond Law Firm in Mississippi, we understand the difficulties you face when your earnings are insufficient to cover your bills. We also understand that you nevertheless hesitate to file bankruptcy for a variety of reasons that may or may not be valid.
As reported by Time, bankruptcy myths abound. Here are the top five.
Myth 1: Filing bankruptcy means I am a personal failure
Nothing could be further from the truth. Like you, the vast majority of people who file bankruptcy were not living “high on the hog” while piling up debt they knew they could not pay. Rather, the stagnant economy compounded by increasing prices, particularly medical costs, is the toxic combination accounting for most people’s financial woes.
Myth 2: All my debts will be discharged
While it is true that Chapter 7 bankruptcy discharges virtually all of your consumer and medical debt, you are still responsible for paying the following:
- Student loans
- Federal and state tax delinquencies
- Child support
Myth 3: I will lose everything
No you will not. One of the best Chapter 7 provisions is the one that allows you to exempt a good deal of your personal property from bankruptcy. For instance, your clothing, furniture and household goods are all exempt, as is your equity in your home and vehicles. Even your qualified retirement funds are exempt.
Myth 4: My credit will be ruined forever
While it is true that you will lose your credit cards when you file bankruptcy, this does not mean that you are doomed to a life of never-ending financial drudgery. Quite the contrary. Filing bankruptcy actually improves your credit score, often by as much as 100 points, due to the discharge of your credit card debts. Once your bankruptcy concludes, you then can rebuild your credit. Admittedly, you likely will need to do this by means of secured credit cards with higher interest rates, but using them responsibly and making your payments on time starts you on your way to reestablishing your credit.
Myth 5: Everyone will know I filed bankruptcy
It likely will surprise you to learn that approximately 1.5 million Americans file bankruptcy every year. Do you know who they are? Probably not. No one’s name is published in the local newspaper or online unless they are famous and social media revels in their financial problems. While your bankruptcy filing is a matter of public record, few people are so interested in you and your financial dealings that they will go to the trouble of trying to find it.
For more information on this subject, please visit this page on our website.