If you or a loved one are currently considering bankruptcy to address your financial problems and obtain a financial fresh start, it is important to remember that not everything you hear about the process is true. There are a great deal of bankruptcy myths surrounding bankruptcy, and they often comes through word of mouth, anecdotes, and sheer misinformation they gets perpetuated among the public. Taking these myths as fact can not only give you the
wrong idea of what bankruptcy is truly intended for and how it is used, but can also lead to critical errors in your financial journey that may impact your ability to qualify or navigate the process successfully. It is important that you should understand about common Bankruptcy Myths and Facts.
At Allmand Law Firm, PLLC, our Dallas bankruptcy lawyers have worked with many clients across the Dallas-Fort Worth area, and we have heard it all when it comes to myths about bankruptcy. Below, we have put together some of the most common myths we hear from our clients, and have provided the facts that put them to rest:
Bankruptcy Myths and Facts –
- Bankruptcy will eliminate all past debts. People may mistakenly think filing for bankruptcy will provide them with
a completely “fresh start” and blank financial slate that
means they won’t have to pay back any of the money they have owed.
While it is true that bankruptcy can provide a type of fresh start in
a brighter financial journey, several types of debt, including alimony,
child support, restitution payments, and even student loan payments, are
not discharged by bankruptcy, and you will still be responsible for paying
them. If you have kept up with filing your taxes, there is a chance that
any tax debts you have may be reduced or eliminated, but if not, you will
still be responsible for these debts as well.
- Bankruptcy will destroy your credit permanently. Your credit will take a hit, but it is only temporary, and you will find
that you will very soon be receiving credit card offers through the mail
once again. In order to rebuild your credit, take advantage of a secured,
low-limit credit card and start making regular, on-time payments. Within
a year, switch to a regular credit card and continue making payments.
As long as your payments are not late, your credit score will improve.
Bankruptcy is not a process that is intended to permanently scar and hinder
consumers, and there is always life after bankruptcy.
- Spending sprees right before filing for bankruptcy won’t have to
be repaid. Courts consider this to be fraudulent activity, and any debt that you rack
up through fraud is not dischargeable. You will still be responsible for
repayment even if you have filed for bankruptcy. Fraud can not only impact
your bankruptcy case, but also potentially expose you to criminal allegations.
Simply put, don’t believe this myth. It can cause a great deal of trouble.
- Those who file for bankruptcy can’t control their spending and are
financially irresponsible. This simply isn’t the case for many well-intentioned Americans. A
person who files for bankruptcy does not necessarily always have a spending
problem. Personal problems like a long-term serious illness, an expensive
divorce, or losing one’s job can cause even the most responsible
people to have serious financial issues that can only be solved by bankruptcy.
In a time when financial problems impact thousands of Americans, bankruptcy
becomes a tool that helps good people who have fallen on tough times.
Bankruptcy is not meant to be a financial cure-all, but it can benefit many people who are struggling to regain financial control once again. Bankruptcy does not define a person, and there is always hope to regain financial freedom. If you are considering filing for bankruptcy, request for a FREE financial empowerment session to learn more about your options.