Bankruptcy is a powerful tool that can save someone from crippling financial debt. Many people can improve their lives by filing for bankruptcy. The myths surrounding bankruptcy keep people from taking advantage of such a powerful resource to take control of their lives. Knowing the truth about bankruptcy can help many people make an informed decision about their future.
Bankruptcy is not something that only a few people need to use. Hundreds of thousands of people file for bankruptcy every year. These are people who were able to look past false ideas that grew into myths about bankruptcy. The following are only a few of the myths that everyone needs to recognize as false statements:
Bankruptcy ruins credit forever
Bankruptcy does impact credit, but not forever. Credit scores typically see an impact from bankruptcy for anywhere between seven and ten years. Some people see offers for new credit cards shortly after they discharge their debt.
You can spend recklessly before the bankruptcy finalizes
Some people get the idea in their head that they can max out their credit cards and go on a colossal spending spree before they finish their bankruptcy, and the debt will all disappear. Courts have determined this behavior is a form of fraud, and debt that a person accrues through fraud is not permissible by bankruptcy. This determination means that an applicant for bankruptcy will keep the deficit from reckless spending right before the application.
Bankruptcy eliminates all debt
Bankruptcy can clear away most forms of debt from an applicant, but not all of it. Bankruptcy clears away many kinds of debt, including personal loans, utility bills, credit card debt, due rent, and medical debt. Bankruptcy does not remove student loans, tax debt, child support, and alimony.
Filing for bankruptcy is a sign of failure
Life throws many challenges at people. Many things can devastate what savings someone may have from sudden job loss, disasters, divorce, and severe illness or injury. When a savings runs dry, the only option to stay afloat might be spending on credit cards. This spending adds up faster than many people expect and can leave a person drowning in debt.
Bankruptcy is commonly the answer to an unforeseeable problem. Do not let false stories and myths about something so beneficial keep you from protecting your future.