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Common Bankruptcy Myths Debunked

For those with a lot of debt, bankruptcy may be a good option. Bankruptcy can help eliminate debt and give you a fresh start.

However, it’s not as easy as that. Bankruptcy can be a complex process. There is also a lot of misinformation about bankruptcy. Those who are against it may spread falsehoods about the process.

You can make good decisions if you know the truth about the process. What is a myth about bankruptcy, and what is considered the truth? Here are some common myths debunked.

Bankruptcy Discharges All Debts

Bankruptcy will not erase all your debts. Chapter 7 bankruptcy will discharge most unsecured debts such as personal loans, credit card charges, medical bills, and utility bills. Chapter 7 can even get rid of secured debts under certain circumstances. However, court-ordered debts, such as child support and spousal support, cannot be removed under any circumstances. Neither can tax debts or student loans.

Bankruptcy Terminates Your Credit Forever

Many people are scared to file for bankruptcy because they think they will never be able to buy a car or house again. This is not true. Bankruptcy can lower your credit score for a while — up to 10 years — but you will likely still get credit offers within 18 months of filing bankruptcy. Credit scores tend to rise pretty quickly after a bankruptcy discharge. Some people see their credit scores go up by 100 points within a year.

You Will Lose Everything You Own

Another reason why people are afraid of bankruptcy is that they think they will lose everything they have. You can rest assured knowing you will not be left out on the street with nothing.  Certain property in a bankruptcy filing is exempt. Your house, retirement plans, and personal property generally are safe. Most other assets are worthless to a creditor. Many debtors rarely lose anything at all, but keep in mind that your lawyer will not be able to shield all your assets, especially if you have high-dollar assets.

You Can Only File One Time

There are limitations as to how often you can file, but you can file multiple times. You can file for Chapter 7 bankruptcy once every eight years, while Chapter 13 reorganizations can be filed every two years.

Married Couples Will Need to File Together

If you and your spouse both have large amounts of marital debt, then filing together would make sense. However, it is not required that you do so. If you have much more debt than your spouse, then they do not need to file with you.

Contact Our West Palm Beach Bankruptcy Attorney Today

Bankruptcy happens fairly often, but there are still a lot of rumors and myths about it. Get the facts from an experienced lawyer.

Count on West Palm Beach bankruptcy attorney Brian K. McMahon, P.A., to give you the truth about bankruptcy. We have more than 30 years of experience. We will evaluate your situation and advise you of your rights and options. To schedule a consultation, call (561) 658-1789 or fill out the online form. We serve the West Palm Beach, Boca Raton, Port St. Lucie, and South Florida areas.