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Myths About Filing for Bankruptcy
U.S. bankruptcy laws are designed to help people escape overwhelming debt, but bankruptcy is often associated with an unfortunate stigma. If you are facing an insurmountable volume of debt but feel reticent about pursuing bankruptcy, review the common misconceptions below to gain a better understanding of your legal rights.
If you are ready to speak with an attorney today, contact Crary Buchanan at your earliest convenience to schedule a free, no-obligation consultation.
- Myth #1: If I file for bankruptcy, my credit will be destroyed forever.
Filing for bankruptcy will damage your credit, but that doesn’t mean you can’t rebuild it. In fact, bankruptcy will only remain on your financial history for the next ten years. During this time, you can reestablish your financial credibility by making regular payments to your bills and spending wisely.
- Myth #2: Everyone will know that I filed for bankruptcy.
Bankruptcy is a public issue, but this doesn’t mean that everyone will know that you filed. In fact, it is unlikely that people will find out, since most people do not take advantage of public records. In the past, newspapers reported individuals who filed for bankruptcy but this is no longer practiced.
- Myth #3: I filed for bankruptcy, so my spouse has to file as well.
It can be legally advantageous to file for bankruptcy with your spouse, but it is not required by law. In fact, it may be beneficial for each spouse to separately file for bankruptcy. To make sure that you take every aspect of your case into consideration, speak with a skilled attorney before you officially file.
- Myth #4: I will lose all of my belongings if I file for bankruptcy.
There are two basic types of bankruptcy: Chapter 13 and Chapter 7. Chapter 7, also called “liquidation bankruptcy” allows your creditors to liquidate some of your belongings to pay off your outstanding debts. However, vital belongings – such as your vehicle – could be exempt from liquidation.
- Myth #5: Filing for bankruptcy will make all of my debt disappear.
This is not always true. Chapter 7 bankruptcy can discharge all (or most) of your unsecured debts, but it will not affect other types of debt, such as student loans and unpaid child support. Chapter 13 bankruptcy does not discharge any debts, but allows you to establish a payment plan to repay them.
- Myth #6: I probably don’t qualify for bankruptcy so I shouldn’t try.
Bankruptcy isn’t for everyone, but it can be a strong financial tool for many debtors. If you do not qualify for one form of bankruptcy, you will most likely be able to file under a different chapter. A lawyer can help you understand the best bankruptcy filing option for your unique financial situation.
- Myth: #7: I’m going to file; I should pay back my family and friends.
If you are considering bankruptcy, do not make extra efforts to pay your loved ones for money that you borrowed from them in the past. If you plan to file, you should make sure that you do not show any preference between your family members and creditors. This can cause legal problems in the future.
Contact our Port St. Lucie Bankruptcy Lawyers
If you have additional questions about bankruptcy law in Florida, speak with a member of our legal team today. We are committed to helping people like you take the first step toward financially security by escaping their debts. To see how Crary Buchanan can help you, contact us to schedule your initial case consultation. We look forward to hearing from you soon!
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