There’s a lot of fear and a lot of misinformation that goes on around bankruptcy. There’s a lot of fear and trepidation as well. But filing bankruptcy is common and, when the right channels are followed, not as complicated or momentous as it seems. Knowing common falsehoods about bankruptcy and how best to approach the situation will make you that much more secure and safe in your decision to finally file for bankruptcy and start your financial life over again.
What are some of the most common bankruptcy myths that you should know about?
Every bankruptcy situation is unique, so there can be a lot of discrepancies. What do you do as a married couple? What happens to your credit? Can you protect some of your property? There’s a lot of false answers to those questions out on the internet. Knowing the common myths and how to spot them will make the ordeal much less stressful for you as you move forward.
To help you out, we’ve put together a list of the most common myths one faces when they begin to look at bankruptcy as an option.
Married Couples Must File Together
Despite shared property and finances, debt can still only be allocated to one member of a marriage. If one spouse has a significant amount of debt and the other does not, there is no need for both to file and cause a financial burden. Spouses can file separately for bankruptcy.
You Will Lose Everything
Depending on how you file, you won’t lose any property at all, but, depending on your situation, your personal property can be seized in order to make up for bad debt. The good news is in many states, certain property–such as your home, car, and even your clothes–are exempt from being seized to satisfy debt. You won’t be left homeless. You will owe, but you won’t be stripped of everything you own.
Bankruptcy Clears Me of All Debt
While bankruptcy is a blank slate in a lot of ways, it does not remove all debt to your name. For example, student debt cannot be cleared by filing for bankruptcy. This is to prevent people from abusing the system and using bankruptcy as a way to get out of debt that they are financially capable of paying back. It’s a tool to help in dire situations, not an escape route for debt you don’t want to pay anymore.
Will Bankruptcy Hurt My Credit?
It’s different for everyone but your credit will be, at least partially, affected by a bankruptcy filing. It remains on your financial reports for 10 years and during that time you may find it difficult to secure a credit card or new loans, but your credit will not be destroyed, and you do have the ability to build it back up.
Can I Go on a Spending Spree Right Before I File?
A common misconception is that if you’re filing for bankruptcy then you should go on a spending spree. But, if you rack up charges and file, that’s considered fraud in the eyes of the court and your bankruptcy filing may be completely thrown out, leaving you to clean up the financial mess on your own and without the legal safety net of a bankruptcy filing.
Bankruptcy can be scary, filing for it can seem complicated, but don’t let common myths ruin your chance to getting your life and finances back in order. Get started with advice from a trusted and experienced personal bankruptcy attorney. If you live in the state of Massachusetts, Hines Law is a full-service bankruptcy firm that can help.
With over 15 years’ experience and knowledge, the bankruptcy lawyers at Hines Law will guide you every step of the way no matter what specific issues you may be facing. Our bankruptcy firm specializes in Chapter 7 and Chapter 13 filings and we are committed to safeguard your interests and future by providing the right solution for your debt relief. Call us today for a Free Case Evaluation!