Common myths about bankruptcy

On Behalf of | Aug 2, 2021 | Bankruptcy

Texans who are experiencing financial difficulties might feel as if the weight of the world is on their shoulders. They could be fearful of the prospect of bankruptcy due to misconceptions about it. Before dismissing the idea of filing for personal bankruptcy, it can be beneficial to combat the most frequently referenced myths about the process.

Understanding the truth about filing for bankruptcy

There are common misconceptions about bankruptcy. Married people may think that if one person files, they both must file. That is not true. If the debt is shared, then both should consider filing. If it is individual debt, a joint filing is unnecessary.

Undoubtedly, bankruptcy will have a negative impact on credit, but it does not destroy it permanently. Getting secured credit cards is one way to improve credit after bankruptcy. The credit score can raise relatively quickly if the person makes the payments on time.

Some people might believe they can spend frivolously and accrue massive debt just before filing and not need to pay it back. That is unwise. The bankruptcy court scrutinizes debt, and if a judge sees purchases that are unusual or excessive, this could endanger the case.

Bankruptcy can clear unsecured and some secured debt. Spousal support and child support cannot be discharged.

In addition, some people might have received a bankruptcy discharge in the past and are again confronted by financial trouble. Contrary to popular belief, it is possible to file for bankruptcy again, depending on the time frame from the previous case and whether Chapter 7 or Chapter 13 was filed.

Bankruptcy myths should not be accepted at face value

Filing for bankruptcy does not pigeonhole a person as irresponsible. It is a strategy to get into better financial circumstances. They will not lose all their property, nor will they keep all their property. Bankruptcy can help them move forward without smothering debt, constant debt collector calls, and daily worry. Knowing the truth can remove the stigma surrounding it and give a debtor the tools to make an evenhanded choice about a bankruptcy case.