Busting 4 Common Myths About Bankruptcy

Busting 4 Common Myths About Bankruptcy

Posted By Owenby Law, P.A. || 7-Apr-2017

There are many myths and misconceptions when it comes to bankruptcy. Often, these myths take small portions of truth and blow them out of proportion. In other cases, they are simply and entirely incorrect. Because having the facts is important when you are considering bankruptcy or taking the steps needed to initiate the process, our legal team at Owenby Law, P.A. wants to help local residents ensure they can spot a common myth when they hear one.

As Jacksonville bankruptcy attorneys who have heled hard working men and women throughout Florida when they have fallen on tough times, we have heard it all when it comes to bankruptcy myths. Here are five of the most common myths and misconceptions we hear:

Myth #1: Bankruptcy is only for the Financially Irresponsible

For millions of Americans who have found themselves immersed in a sea of insurmountable debt, this is simply not true. Bankruptcy exists to help people from all walks of life who are experiencing financial difficulties for a variety of reasons, including job loss, wage reductions, injuries, disabilities, and illnesses. Bankruptcy often becomes the saving grace for people who support large families, have underwater mortgages, or have otherwise fallen behind on payments and have little room to get ahead. Bankruptcy is not designed for the financially irresponsible – it’s there for the hard-working American.

Myth #2: I’ll Lose Everything if I File for Bankruptcy

Debtor’s prison is an archaic concept that was abolished hundreds of years ago. Still, it seems that the concept of being punished for debt still exists when it comes to myths. In reality, you will not lose everything and become destitute should you file for bankruptcy. In fact, certain exemptions or repayment plans under Chapter 13 bankruptcy can allow you to keep much, if not all of your personal property. Remember, bankruptcy was made to help those in financial need, not punish them.

Myth #3: Bankruptcy Ruins Your Credit Forever

This myth is based in some semblance of truth, but it is still incorrect. While a bankruptcy filing does have an impact on credit, the effects are not permanent nor are they ruinous. In fact, people who complete a bankruptcy, engage in healthy financial habits, and work to build credit often find that they are able to obtain higher credits scores than they had before.

Myth #4: Bankruptcy Eliminates All of Your Debts

This myth can be dangerous if you subscribe to it wholeheartedly and attempt to rack up debts thinking they’ll be eliminated. Not only can this be considered fraud, it is simply not correct. People who file bankruptcy can eliminate certain debts through a discharge at the end of their case, but these debts are limited to dischargeable unsecured debts, such as credit card debt, medical bills, utility bills, and other debt for which there was no collateral requirement. Secured debts, which can include mortgages, child support and alimony obligations, student loans (in most cases), and tax debts, can generally not be eliminated in bankruptcy.

When it comes to gaining control of your finances, having the right information and the right support can make the difference. This is why our legal team at Owenby Law, P.A. is passionate about educating clients about debt, the bankruptcy process, and how to take the rights steps toward financial freedom.

If you have questions regarding bankruptcy and your unique situation, we invite you to speak with an experienced bankruptcy lawyer at Owenby Law, P.A. We proudly serve clients throughout Jacksonville and the surrounding areas of Florida from multiple office locations. Contact us for a FREE consultation.

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