Five Common Bankruptcy Myths

Millions of Americans are in debt, and many might consider bankruptcy to help resolve their financial difficulties. If you are considering bankruptcy, it is helpful to learn as much as you can about it. There are many myths that are floating around, and you may have heard some of them. Here are five of the most common bankruptcy myths and the truth about how bankruptcy can help you. 

Myth – Bankruptcy Ruins Your Credit Forever

If you are in debt, you are likely already facing credit problems. Bankruptcy is a way to take charge of your finances and stop further harm. Bankruptcy will show up on your credit history, but not forever. Chapter 7 bankruptcy falls off your credit history after 10 years and Chapter 13 bankruptcy stays on your credit report for seven years. However, you may immediately begin to rebuild your credit.  

Myth – You Can Spend Before You File and Will Not Have to Pay it Back

You may have heard some people say that you should go on a spending spree right before you file bankruptcy because you will not need to pay it back. That is simply not true. In fact, spending during this time can have an adverse effect on bankruptcy. The court may determine that you are filing a fraudulent bankruptcy case. Instead, avoid making any large purchases when you are planning on filing for bankruptcy. 

Myth – All Your Debts Are Discharged with Bankruptcy

Some, but not all, of your debts may be discharged in bankruptcy. Discharge of a debt means that the creditor wipes out the debt, and you no longer owe it. Discharge of debts varies between Chapter 7 and Chapter 13. In general, some types of debt cannot be discharged, such as student loans, debt for child support or alimony, taxes, and debt due to a personal injury case. It is best to discuss the types of debt that will be discharged with a bankruptcy attorney prior to filing. 

Myth – You Will Lose Everything in Bankruptcy

Chapter 13 bankruptcy allows you to consolidate your debts and pay for your property and therefore, you won’t lose any of your assets. Chapter 7 bankruptcy requires you to liquidate assets and pay for your debts. However, even with Chapter 7, you will not lose everything. There are some exemptions. In Florida, you may be allowed to keep your home under the homestead exemption. You are also likely allowed to keep your car and some other possessions. A bankruptcy lawyer will assist you in determining which of your assets must be liquidated. 

Myth – Filing Bankruptcy is Difficult

Filing bankruptcy is not at all difficult. It is easy, especially when you have guidance from a knowledgeable bankruptcy attorney. Before you file, make sure you understand the process and what to expect. Gather documents and information that will make filing bankruptcy simple and less stressful. A consultation is the first step in the process. Call us today at Adam Law Group at (904) 694-5022 to schedule a meeting to discuss your bankruptcy needs.