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Bankruptcy myths you should not believe

On Behalf of | Aug 20, 2019 | Uncategorized

Many Florida residents currently live paycheck to paycheck. It may not take much — one emergency, one serious illness, one unexpected expense — to cause them to lose everything. If you find yourself one of the many who are struggling to keep finances under control, know that various debt relief options may be open to you — such as bankruptcy.

There are a lot of people who do what they can to avoid bankruptcy at all costs. They have heard so many negatives about it that they fail to consider the good this form of debt relief can do. A lot of what is said about bankruptcy are actually myths that you should not believe. What are a few of the most common bankruptcy myths?

Myth number one: Bankruptcy will cause more harm than good

If you are already economically depressed, you do not want to do anything that will worsen your situation. Some people believe bankruptcy is the worst thing one can do when in debt. Bankruptcy is not for everyone. Whether you should file really depends on how much debt you have and what your income situation looks like. Filing is not the end of the world, and it will not forever ruin your financial future. It is possible to rebuild your credit with handwork and dedication.

Myth number two: You will lose all of your assets

Despite popular belief, filing for bankruptcy does not mean you will have nothing left at the end of your bankruptcy term. With Chapter 7 bankruptcy, you may have to sell some non-essential property to pay off creditors, but you should be able to keep everything else. With Chapter 13 bankruptcy, you generally get to keep all of your property, as you will still be paying for it, just in a manner that is more affordable for you.

Myth number three: All debts qualify for discharge

This would be nice, but it is not how bankruptcy works. There are some debts you may still be responsible in the end, such as:

  • Student loans
  • Spousal/child support
  • Certain tax debt
  • Civil judgments

Debts that do qualify for discharge include medical expenses, personal loans, credit cards and other consumer debts.

To file or not to file?

This is a very personal decision. No one can tell you that you should do it, and you cannot believe everyone who tells you that you shouldn’t — particularly when their reasoning is tied to these and various other bankruptcy myths that simply are not true. Only you can decide if this form of debt relief is right for you. Just take the time and do your research so that your final decision on the matter is an informed one.