Filing for bankruptcy is a viable way to eliminate extensive debt and restore your secure financial footing. Unfortunately, some people try to avoid this filing at all costs due to all the misconceptions around it.
Knowing the truth about these common myths and misconceptions will help you see why this can be a beneficial step in restoring your financial health.
1. Everyone who files for bankruptcy is financially irresponsible
It’s important to realize that many factors and issues can result in someone needing to file for bankruptcy. Divorce, medical emergencies and job loss have all caused well-intentioned people to do this. For some, financial missteps may be to blame; however, even in this case, bankruptcy offers a legal and effective way to get out of debt.
2. Bankruptcy will discharge all your past debts
While the purpose of filing for bankruptcy is to help you get a fresh start, it’s important to realize that not all debts can be discharged through this filing. If you owe child support or alimony, these won’t be removed by bankruptcy. Usually, student loans aren’t included in the filing either, unless you prove hardship. Before choosing bankruptcy, it’s smart to know what debts will be discharged and which ones you will still have to pay.
3. Filing for Bankruptcy ruins your credit forever
Chapter 7 bankruptcy filings can remain on your credit report for up to 10 years from the filing date. However, its impact on your credit rating will be reduced as time passes. Many people see improvements in their credit reports long before they thought they would after filing.
Knowing the truth about filing for bankruptcy
Before you file for bankruptcy, it’s important to know the truth about the process. You can also get in touch with experts who can provide more information about the process.