There are many myths surrounding personal bankruptcy. Here’s a look at some of the most common myths.
Myth 1: Bankruptcy is Because of Financial Irresponsibility. Yes there are situations where this is the case. However, many people file bankruptcy due to circumstances that are outside their control. For instance, many bankruptcies are due to medical bills linked to unforeseen health issues. Other common reasons include loss of a job or divorce.
Myth 2: Bankruptcy Permanently Ruins Your Credit. Filing bankruptcy will impact your credit upon filing, however, after a year of filing bankruptcy most debtors find their credit scores have increased on average 125 points from the date of filing.
Myth 3: Bankruptcy Discharges all Past Debts. Unfortunately no. There are several types of debt that are not discharged by bankruptcy. Domestic support obligations such as alimony or child support cannot be discharged through bankruptcy. This also applies to restitution related to a prior crime and the vast majority of overdue taxes.
Myth 4: You Can’t File Bankruptcy if You have a Job. This is not true. Many people who are currently employed are able to qualify for bankruptcy if their income falls below a minimum threshold.
Myth 5: You’ll Lose Everything. Filing for bankruptcy does not necessarily mean that you will lose all of your possessions. For the average person, most personal possessions are covered by exemptions.
Call Bankruptcy Solo, LLC today at 636-493-1700 to talk to an attorney and determine if you qualify for bankruptcy.