Bankruptcy 101: Four Common Misconceptions
In one episode of hit show The Office, the company manager was falling deeply in debt and in an attempt to quickly rectify the situation, shouted across the room: “I declare bankruptcy!” As the rest of the characters knew, and most of us do too, that’s not quite how it works. There are a few other common myths about bankruptcy though, that aren’t as commonly understood. Let’s look further into some of the problems most people have when they think about bankruptcy as an option.
- It’s often assumed that if you’re married, it means you’ll need to file for bankruptcy together with your spouse. This is false, but there are considerable impacts that filing for bankruptcy will have on each party in the marriage. You can certainly file as individuals, but it may in some cases be more beneficial to the indebted party to file a joint bankruptcy claim. This is different for each couple, and it’s important to have an experienced lawyer on hand to inform you of your options for filing either separately or together.
- Another myth with bankruptcy is that you’ll be forced to liquidate all your assets, and be left to start with nothing: no debt, but nothing to build from, either. When you file for bankruptcy, you’ll very likely be able to keep your house, car, and other major property holdings. The point of bankruptcy isn’t to make you homeless, but to set you up to be a productive and contributing member of society. If you’re in danger of having your house foreclosed upon or your car repossessed, bankruptcy can actually be a very logical choice.
- Many people think that they’ll never again have a good credit score after filing for bankruptcy, which is patently untrue. In the event that your finances are in such dire straits to be considering bankruptcy, your credit score is most likely not the best to begin with. Rather than digging yourself deeper into a hole, filing for bankruptcy can be the most responsible step you take in beginning your journey back into financial stability. While it will still take time to build your credit score into a healthy state, bankruptcy would not be dealing it a death blow, rather providing some powerful, though unpleasant, medicine.
- Perhaps the most damaging myth about bankruptcy is that it’s impossible for most people to even consider it as a viable option. If you’re suffering from overwhelming debt, the most likely categories of bankruptcy that you’ll file under are Chapter 7 or Chapter 13. These are attainable and should not be considered reserved for special cases other than your own. After the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed, many people thought that would eliminate bankruptcy as an option for the common person, but far from it.
If you’re considering filing for bankruptcy, you’ll need an experienced lawyer to guide you through the process. Call the office of Michael Alan Siddons today for a free consultation at (610) 255-7500 to learn how you can turn around your financial future.