Misconceptions and Myths About Bankruptcy
There are many myths about bankruptcy that strike fear in the hearts of the financially insolvent. Unfortunately, these misconceptions often deter people from filing and obtaining the help they need. The best way to combat misinformation is through education and there are a few things that anyone considering filing that holds reservations about the process should know.
I'm A Bad Person
One of the reasons people avoid filing for bankruptcy is the idea that doing so makes them a bad person or that people will think they were financially irresponsible. The truth is that the majority of people who file for bankruptcy are not poor money managers, but victims of unforeseen life circumstances. Job loss, divorce, death in the family and medical illness can all lead to financial hardships. Filing for bankruptcy doesn't make someone a bad person; rather it is a decision of responsibility that leads to debt resolution and a better chance of financial success for the future.
I Will Lose Everything
One of the most common misconceptions about bankruptcy is that one's assets are immediately at risk for liquidation by creditors. While there are some instances in which a few assets could be liquidated to satisfy debts to creditors, this is far from the norm. In fact, this generally only happens in Chapter 7 cases and is only applicable to non-exempt property. Bankruptcy exemption laws protect much of one's assets in bankruptcy filing such as a house, car, clothing, furniture, personal items and even retirement funds.
I Will Suffer Credit Damage
Credit damage is another major concern among bankruptcy filers as most people have heard something to the effect of a "bankruptcy stays on your credit for 10 years and is damaging." Yes, a bankruptcy can be listed on a credit report for up to ten years, but it does not mean that has a negative impact. The truth is that the majority of damage done to credit happens long before bankruptcy when payments are missed and accounts become delinquent. A credit standing is based on payment history and the status of an account, both of which are negative prior to filing for bankruptcy. After a bankruptcy discharge, debtors find that their negative payment histories are erased and their accounts are no longer considered delinquent. This results in an almost immediate improvement to credit. However, there is still much work to be done. Credit repair takes time and effort, so undoing years of negative account histories does take a year or two even once the negative remarks are removed.
The Lee Law Firm aims to help local residents resolve their debt issues and achieve a financially healthy future. Their mission is to provide high quality legal representation that to assist hard working people lower monthly debt payments, stop wage garnishment, prevent foreclosures, and stop calls from creditors. The Lee Law Firm bankruptcy attorneys have many years of experience in all aspects of Chapter 7 and Chapter 13 Bankruptcy in Dallas.
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