Bankruptcy has quite a negative reputation, and it’s unfortunate that this keeps people from utilizing all the resources available to them. The many myths associated with bankruptcy could be holding you back. Before you turn your back on bankruptcy, take a look at these shattered myths first.
Myth: Everybody is going to know that I filed for bankruptcy.
Fact: Few people are going to realize that you’ve filed. The legal proceeding may be public, but it takes effort to seek out the details. Unless somebody is actively looking, he or she is not going to know. Even if your bankruptcy is published in the paper, chances are small that it will actually be seen.
Myth: Chapter 7 bankruptcy will eliminate all my debts.
Fact: Unfortunately, this is not the case. There are certain kinds of debts that simply cannot be discharged. These include child support payments, student loans and criminal restitution. Taxes often fall into the same boat. You are still typically responsible for paying these off after bankruptcy, but there are some exceptions
Myth: Bankruptcy will leave me with nothing.
Fact: Bankruptcy does not leave you with no belongings. Most people end up keeping their belongings. Homes and cars are yours as long as you can continue making the payments on them.
Myth: I will never be able to have good credit again.
Fact: You can have credit again, though you may have to contend with higher interest rates. You can also begin building credit again with prepaid credit cards and the like. Your credit is not permanently ruined if you turn things around.
Myth: Filing for bankruptcy means that I am irresponsible.
Fact: Filing is actually the most responsible thing you can be doing in some cases. Filing for bankruptcy once is not an abuse, especially if you are trying to deal with unemployment, legal fees, divorce of something similar. Instead of seeing bankruptcy as “the end,” look to it as a new beginning.
Myth: Filing for bankruptcy is too complicated for me.
Fact: Bankruptcy paperwork really isn’t that complicated. An attorney will help you compile all the necessary documents to make it as simple as possible.
Myth: Bankruptcy isn’t going to do me any good because creditors will continue to harass me.
Fact: Once your bankruptcy has been completed, a creditor is not allowed to contact you. This could be considered harassment, and this is required to stop. This includes snail mail, phone calls and electronic mail.
Myth: I can’t file bankruptcy because I have a job.
Fact: You might have a well-paying job, but this does not mean you cannot file. In fact, filing for Chapter 13 bankruptcy requires you to have a job in the first place.
Myth: I won’t be able to discharge medical debt.
Fact: Just like debt related to credit cards and personal loans, you may be able to discharge medical bills. Of course, your lawyer will have more information about which bills qualify.
Myth: If I am married, my spouse must file with me.
Fact: While a married couple is allowed to file bankruptcy together, it is not mandatory. Of course, you should still defer to your attorney to learn more about which property falls into the bankruptcy estate. You should be well aware of all your options.
Myth: My employer can fire me for filing for bankruptcy.
Fact: According to federal laws, your employer is not allowed to fire you simply because you have filed for bankruptcy.
Bankruptcy may seem intimidating, but this is no excuse to avoid it. You might find that it is the right decision for you. It is always wise to speak to a bankruptcy attorney before making the decision. Your NYC bankruptcy law firm can help you cope with all the stress that accompanies the process.