Just like any other type of law, bankruptcy law is extremely complex, which is why many misconceptions about filing for bankruptcy exist. If you’re thinking about filing for bankruptcy, here are several myths you might have heard and why they simply are not true.
Myth #1: Only Financially Irresponsible People File Bankruptcy
While some may abuse bankruptcy law, the vast majority of people who end up in a situation where they need to file are not financially irresponsible. Many difficult life events, like a job loss, divorce, or an illness that results in high medical bills, can result in overwhelming amounts of debt.
Myth #2: Bankruptcy Discharges All Debts
One aspect of bankruptcy law that many people misunderstand is that bankruptcy is designed to discharge all debts. While bankruptcy can provide you with a fresh financial start, there are some debts that it won’t eliminate. For example, this process does not get rid of domestic support obligations, like alimony and child support.
My #3: Bankruptcy Permanently Ruins Your Credit
Once you file bankruptcy, your credit score will likely be negatively impacted by this legal action, and your decision to file may stay on your credit report for several years. However, this does not mean that your credit will be ruined permanently. Shortly after you file bankruptcy, you can work towards rebuilding your credit by acquiring a secured credit card.
The more you know about bankruptcy law, the better prepared you will be to handle the filing process. If you have any questions about the bankruptcy process, don’t hesitate to reach out to us at Northpointe Law Group.