Bankruptcy is treated almost like a bad word in the U.S., but it really shouldn’t be. You remember that game we used to play when we were kids when someone would say “apple pie” at one end of a long line and by the time the message was passed down to the end it came out as “happy fly?” Well, that’s kind of what happened with bankruptcy. Nobody really knows what they’re talking about and now we have a bunch of Chapter 7 bankruptcy myths to debunk.
Chapter 7 Bankruptcy Myths
- Myth #1 Bankruptcy will permanently ruin your credit – This is totally untrue. In fact, in the long run, filing Chapter 7 bankruptcy is often better for your credit. While you still have debt, your credit will continue to plummet. However, once you’ve discharged your debt through bankruptcy, you’re free to start seriously rebuilding your credit score.
- Myth #2 Filing bankruptcy discharges all debts – While it would be great if this one were true, it isn’t. Chapter 7 bankruptcy can get you clear of most, and maybe even all of your debt, but there are some types of debt that can’t be discharged, such as most taxes, alimony, and child support payments. It is possible to discharge student loan debt, but it is extremely difficult.
- Myth #3 You have to give up all of your assets in Chapter 7 bankruptcy – In some cases, you may have to surrender some of your stuff, but actually, most people who file Chapter 7 bankruptcy never have to give up anything. This is because bankruptcy law offers tons of generous exemptions you can use to protect your stuff.
- Myth #4 Only irresponsible people file for bankruptcy – Anyone can be burdened by debt, and many people who find themselves in financial trouble got there through no fault of their own. One of the most common reasons people start to consider bankruptcy is after a medical emergency. Medical expenses in this country are outrageous, and paying them off is often nearly impossible. There are a ton of reasons that you may find yourself needing help, but that doesn’t mean you’re irresponsible.
Don’t be influenced by the various myths about bankruptcy. Chapter 7 bankruptcy is often a great solution for many people struggling to pay their debts. An experienced bankruptcy attorney can tell you more about what is and isn’t true about bankruptcy.