Thompson Law Group, P.C.

Common myths about filing for personal bankruptcy

Coming to terms with your financial problems is one thing, but actually taking action to address them is another. While many Pennsylvanians seek to resolve their debt problems, others are deterred from real solutions due to common misconceptions and myths about the bankruptcy process.

Filing for personal bankruptcy is not an easy decision to make, and it certainly is not a simple process to go through. Nonetheless, many fear going through the process because they are under the impression that the cons outweigh the pros.

A major concern for potential filers is their credit score. Many believe that his or her credit score will be ruined for seven or more years following bankruptcy. But, this is just a common myth. Once the bankruptcy process is complete and debt is discharged, a filer can begin repairing his or her credit. A filer's credit could be repaired in just a few years.

Another common myth is that a filer will lose all of their assets. When a person files for bankruptcy, his or her property and assets do become subject to a seizure and sale. However, some assets are exempt. This means that certain property is saved from being seized during the process.

Other common myths are that it will eliminate all of one's debts, and that it will solve all of one's financial problems. While filing for Chapter 7 and Chapter 13 bankruptcy can help address debt problems, they will not complexly wipe them out.

Filers will still have to take the time to rebuild their credit, even though they have been offered a fresh financial start. Additionally, these processes do not eliminate all types of debt, thus, filers could easily still be plagued by some debts following the process.

No matter the reason for filing for personal bankruptcy, it is important to be fully informed. It is not a process one should enter into blindly. Therefore, it is crucial to take the time to have any and all questions answered. An attorney experienced in bankruptcy law could help, ensuring that one's rights and interests are protected.

Source: The Motley Fool, "4 Bankruptcy Myths - Debunked," Maurie Backman, July 30, 2016

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