Dispelling 3 common myths about bankruptcy

On Behalf of | Jun 28, 2022 | Bankruptcy

There is a great deal of stigma surrounding bankruptcy. People believe falsehoods like “only people who are bad with money go through bankruptcy,” but they are exactly that, falsehoods.

Many people file for bankruptcy, often because of reasons beyond their control, such as medical issues. There is no shame in using a tool and bankruptcy is a tool the government offers specifically to help individuals. The idea that bankruptcy is embarrassing or shameful is only one of many misconceptions.

1. Married individuals have to file as a couple

It is possible for only the husband or only the wife to file for bankruptcy. If the debt is only in the name of one spouse, that spouse may wish to file individually. However, if there is debt that accrued under both spouses’ names, then filing as a couple may be a wiser move as the lender may ask the one that did not file to pay off the entire debt if only one of the spouses files for bankruptcy.

2. Bankruptcy means no more credit

Bankruptcy generally does affect credit scores. However, they do not completely eliminate the option of receiving credit. In fact, bankruptcy only remains on an individual’s credit score for a certain period. It is very possible for credit scores to recover from filing for a bankruptcy.

3. People lose everything if they file for bankruptcy

Depending on the type of bankruptcy, individuals may not lose any property. There are exemptions, so individuals often do not lose houses, vehicles and personal belongings.

Bankruptcy offers a chance for a fresh start in life. It exists to help, not cripple.

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