No one wants to be the one to have to file for bankruptcy. The truth is filings are fairly common as over 800,000 American households file for bankruptcy each year. Just like other unpleasant and scary procedures, the reputation of a bankruptcy is based on a few tidbits of truth combined with a lot of embellishment.
These misconceptions about filing often make it so people who wish to file were thinking about it simply don’t. The truth is bankruptcy is not nearly as frightening once you understand it and know that many of the misconceptions are simply not true. Here are some of the most common bankruptcy misconceptions that people still believe according to our friends at The Law Offices of Neil Crane.
- Married Couples Will Both Have to File
The only reason that married couples would have to file together is if both of them are sharing the liability for the debt. It isn’t unusual for one spouse to have a significant amount of debt solely to their name and that is why, in those cases, it is best to file alone. However, if the debt is shared, then both spouses have to file. If only one spouse files the creditors can still demand payment in full from the spouse that didn’t.
- Bankruptcy Permanently Kills Your Credit
This misconception simply isn’t true. Yes, you can expect limited access to credit and for 7 to 10 years bankruptcy will remain in your credit report. However, the effects are not permanent. Your credit score can recover fairly quickly from bankruptcy as long as you make your payments on time and stay away from credit cards. It has been seen that those who file for bankruptcy get their credit score out fairly quickly in as little as 6 to 8 months.
- If You Spend Recklessly Right Before Bankruptcy You Won’t Have to Pay That Money Back
Once again, we have a misconception that isn’t true. Credit card debt is dissolved in chapter 7 bankruptcy, but that doesn’t mean you correctly spend right before you’re about to file. Courts have ruled that racking up charges ahead of the bankruptcy filing is actually considered fraud. That those incurred as a result of fraud are not discharged. This means that filing for bankruptcy will not afford you a debt free shopping spree.
- Bankruptcy Files Are Financially Irresponsible
Out of all the misconceptions out there, this one tends to hurt the most. It is easy to wave off bankruptcy filers as reckless spenders who don’t know how to manage certain finances. More often than not, bankruptcy is not the result of personal failure. The top cause of bankruptcy is divorce, severe illness, and job loss. Many people avoid filing for bankruptcy as they fear it is the mission of failure, but the truth is it isn’t.
If you or a loved one are facing bankruptcy, we want you to know you aren’t alone. Facing bankruptcy can be scary, but with a trusted bankruptcy attorney on your side, the process can go as smoothly as possible.