Every year, over one million people file for bankruptcy. While some people
might assume that filing means that a person can’t control their
spending habits (in some cases this may be true, but certainly not all),
there are plenty of other good reasons why a person might choose bankruptcy.
Below, we have identified and busted the top four myths about bankruptcy.
Bankruptcy will eliminate all past debts. People may mistakenly think that filing for bankruptcy will provide them
with a “fresh start,” and that they won’t have to pay
back any of the money they have owed. However, 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.
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.
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.
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
If you are considering filing for bankruptcy,
call Allmand Law Firm, PLLC today and sign up for a FREE financial empowerment session to learn more
about your options.