If you are thinking about filing for bankruptcy due to financial issues that are you experiencing, the most important thing that you need to understand is that there are many misconceptions floating around regarding the bankruptcy process. So, in other words, everything that you hear from your family, friends and colleagues is not necessarily true. Assuming what you hear is true can give you the wrong idea of bankruptcy and lead you to taking the wrong path toward your financial future. In many cases, this can result in you qualifying for bankruptcy. With that being said, here are some of the most common fallacies about bankruptcy and what is actually true:
Misconception #1: All of Your Prior Debts Will Be Eliminated Via Bankruptcy.
People often assume that they will receive a completely fresh start and blank slate that translates to them not having to pay back a dime of what they previously owe to their creditors when they file for bankruptcy. It is indeed true that bankruptcy provides financial relief and a brighter financial future; however, there are certain financial debts that cannot be eliminated from your past, such as child support, alimony and student loans. These will still be your responsibility even after bankruptcy.
Misconception #2: Your Credit Will Be Destroyed Forever.
While it is true that your credit score takes a hit when you file for bankruptcy, this hit is only temporary. To rebuild your credit, you should apply for a low-limit, secured credit card and ensure that you make regular payments on time. Before long, you will be able to get an unsecured credit card (often through that same company). This will help improve your credit score. Remember, bankruptcy is meant to help your financial future, not ruin it.
Misconception #3: You Can Have a Spending Spree Prior to Filing and Not Worry About Repaying It.
While this may sound like a logical idea, it is actually called fraud in the court's eyes and it will not be discharged. You will still be 100 percent responsible for paying it back. In many cases, this type of activity won't only negatively affect your bankruptcy case, but it could open you up to criminal charges. Therefore, when you are trying to create a better life for yourself, this is not something that you want to do.
While bankruptcy is not the first step when you are in financial trouble, it is a potential option when all else fails. It is a process that will allow you to secure a strong financial future again when you have started drowning and been unable to find your way back up to the surface. If bankruptcy is something that you are considering, contact a bankruptcy lawyer, like Lazaro Carvajal, to discuss your individual situation.