Are you currently in over your head with debt? Have you considered filing for bankruptcy? Many people don’t consider bankruptcy an option because of the many myths and legends that they have heard over the years.
The truth of the matter is that bankruptcy has the potential to give you a clean slate so you can rebuild towards financial freedom. If you are hurting financially, then now is the time to make an informed decision regarding your finances. Learn the truth about bankruptcy so you can differentiate between myth and fact.
Below is listed the major myths that people here about bankruptcy. Speak to a Tampa bankruptcy lawyer from my firm today about the myths regarding bankruptcy and find out if bankruptcy is right for you.
Bankruptcy Applicants are Financially Careless
There are some cases where people run themselves into the ground with credit card debt and spend way beyond their means. However, the majority of cases are filed by people who fell upon financial hardship under unique personal circumstances.
People are file for divorce, are injured in a car accident, or fall seriously ill can fall upon hard times rather quickly. The cost of divorce is high and paying for quality medical care can be extremely expensive. Another large portion of Americans suffer financially due to unemployment. It would be a false stereotype to call all people who file for bankruptcy financially irresponsible.
Bankruptcy Can Discharge All of My Debt
Unfortunately, that is not always the case. A large group of applicants turn to bankruptcy because they believe it will wipe out all of their past debt. However, there are certain types of debt that are exempt from being discharged through bankruptcy.
Some examples of debt that may not be eliminated would include: student loans, some taxes, alimony payments, child support payments, or any restitution owed because of a crime. If you are able to prove that you are under severe financial hardship, then in some cases the student loans can be forgiven.
You Can Spend a Ton of Money Before Filing for Bankruptcy and You Don’t Have to Pay it Back
This is taking advantage of the system and it does not work that way. You cannot spend without abandon prior to filing bankruptcy and expect it to be discharged along with all your other debt.
If you rack up a large amount of debt on your credit card right before filing for bankruptcy and then request that it be discharged, then the court could charge you with bankruptcy fraud. Any fraudulent debt will not be discharged through bankruptcy.
Bankruptcy Will Destroy Your Credit Permanently
This is probably the biggest myth regarding bankruptcy. Many people shy away from filing bankruptcy because they believe that their credit will never recover. The truth is that bankruptcy applicants are usually surprised as to how fast they get credit offers in the mail after filing for bankruptcy.
It is recommended that you first apply for a secured credit card and begin building up your credit that way. By making small and timely payments, you can rebuild your credit up rather quickly. After about six to twelve months you may be able to apply for a regular credit card. Be sure that you make your payments on time- if you fall behind your credit score will suffer as a result.
Bankruptcy Will Cure All of My Financial Problems
If your finances are upside down, don’t use bankruptcy as a cure-all to your problems. You cannot use bankruptcy as the easy solution every time that you accumulate too much debt. Bankruptcy is a viable option, but if you never address the root of the problem then you can get stuck in a vicious repetitive cycle.
You Can File for Bankruptcy As Many Times as You Like
Under the new bankruptcy code, there is a limit on the number of time you can file for Chapter 7 and Chapter 13 bankruptcy. A new Chapter 7 bankruptcy petition cannot be filed if it is within eight years of the previous filing. With Chapter 13, a new petition cannot be filed if it is within two years of a previous Chapter 13 filing or within four years if you filed for Chapter 7, 11, or 12.
If One Spouse Files for Bankruptcy It Will Affect the Other Spouse’s Credit
This is only true in cases where the married couple has a joint account. If one spouse has debt that is under their name alone and they have a separate bank account, it may not influence the other spouse’s credit if they file a separate bankruptcy petition.
You Could Get Fired if Your Boss Finds Out You Filed for Bankruptcy
The law protects employees in this situation. The U.S. Bankruptcy Code prohibits employers from discriminating against their employee or any other debtor that is filing or has filed for bankruptcy in the past.
An employer cannot fire you solely based on bankruptcy. However, if an employer has other reasons in conjunction with the bankruptcy, then they may be able to terminate employment.
If you have further questions regarding the myths or benefits of bankruptcy, then please do not hesitate to contact a Tampa bankruptcy lawyer from my firm. The road to financial freedom could begin today, so call to schedule a free consultation at (813) 223-4821.