Many widely held beliefs about bankruptcy are based on misconceptions rather than facts. In this post, we explore and debunk the most common myths about bankruptcy, including how they are misconstrued, meaningless, or outrightly false.
If you intend to file a petition for bankruptcy but are hesitant because of such misconceptions, our talented bankruptcy attorneys can help clarify these issues. At Walker & Walker Law Offices, we have helped many Minneapolis residents successfully file for bankruptcy and keep their house and other properties; let us help you do the same.
Filers are Financially Irresponsible or Wasteful
This attitude toward bankruptcy is simply untrue. Most people who file for bankruptcy are typically upstanding citizens who have been financially responsible all their lives. Many file because they fell on hard times, such as:
- Illness
- Job loss
- Family issues (e.g., divorce)
Such circumstances are often beyond a person’s control.
Filing Bankruptcy Can Ruin Your Credit
Anyone already struggling to repay their debts likely already has lower credit, which means that filing for a Chapter 7 or Chapter 13 bankruptcy can actually help rebuild that credit. The goal of bankruptcy filing is to either make debts more manageable and easier to pay or to discharge them. Both scenarios provide you with the opportunity for a “fresh start,” thus making you more creditworthy to lenders or credit bureaus and helping you access the benefits you want.
Possibility of Losing Everything
People only file for bankruptcy when they are out of options, so they generally take it very seriously. However, bankruptcy does not necessarily mean that you will lose your house, properties, assets, cars, or retirement accounts. In fact, filing a bankruptcy petition can protect those assets, preventing foreclosures or repossessions.
Public Embarrassment
Although bankruptcy filings are public record, you would have to specifically search for that information on the federal government’s Public Access to Court Electronic Records (PACER) website to find it. Contrary to popular belief, newspapers do not publish bankruptcy filings involving individuals. Therefore, unless you are a public personality or personally reveal your situation, such information likely will stay between you and your attorneys and creditors.
Relentless Creditor Harassment
Increased harassment from creditors after filing for bankruptcy is another blatant misconception. Once you file for bankruptcy, the court issues an automatic stay, barring creditors and collection agencies from recovery efforts; any entities that continue harassing you can attract contempt of court charges and possible sanctions. This allows you to enjoy some peace of mind and reduces your financial stress when your case concludes and when the debts are hopefully discharged.
Contact Our Bankruptcy Attorneys for Legal Help
As you can see, most myths about bankruptcy filing are just that—myths. If anything, filing a bankruptcy petition can actually help you.
If you are considering declaring bankruptcy in Minneapolis, our experienced and compassionate lawyers can guide you through the process, so you can enjoy the benefits of a successful filing. Contact us today to discuss your case.
