Though declaring bankruptcy is a fairly well known occurrence throughout Florida and the rest of the nation, there are a multitude of misconceptions about the process, who files and the end result. In an effort to set the record straight regarding Chapter 13 and Chapter 7 bankruptcies, in this post we will address some of the most common myths.
Perhaps one of the most damaging myths has to do with those who seek relief via a bankruptcy filing. Contrary to popular belief, not everyone who files is irresponsible in their spending. It is not uncommon for those facing financial difficulties to be dealing with other problems such as medical issues, divorce or the loss of a job. These can all be expensive and life altering events that leave individuals exhausted both emotionally as well as financially.
Another misconception that many have regarding bankruptcy is that when it is over, all debts will be gone. While a Chapter 13 or Chapter 7 bankruptcy filing will discharge many types of debts, there are some that will remain. Debts that cannot be discharged include child support and school loans.
The notion that when planning on filing for bankruptcy one can rack up a large amount of debt and then have it discharged is another fallacy. Courts throughout the nation have determined that action is fraud and accordingly, those debts cannot be discharged.
Some people may resist filing for bankruptcy because they fear that it will have an everlasting impact on their credit. The reality however is that in many cases those who file are able to start rebuilding their credit within a month of the close of their bankruptcy. While it will of course take time to reestablish it, for those who make the proper choices going forward, there is no permanent damage.
The final myth we will touch on today is perhaps the most important for anyone who is considering filing. It is the thought that filing for bankruptcy and discharging one’s debt will fix everything. As we mentioned earlier, not all types of debt are dischargeable. Depending what one plans to hold onto, such as a house, large payments may still need to be made on a monthly basis.
The bottom line is that as is the case in any big decision, it is important to get as many facts as possibly before determining which path to take. Bankruptcy is not an exception. A Miami bankruptcy attorney can provide many of those answers and help determine the best way to proceed.
Source: U.S. News & World Report, “5 Bankruptcy Myths Debunked,” Susan Johnston, May 14, 2012