Many people have misconceptions about the bankruptcy process, and believing these myths could keep you from meaningful debt relief. What myths do many people have about bankruptcy?
Myth 1: Bankruptcy is not for everyday people.
It can be easy to see bankruptcy as something that is only for large companies, irresponsible spenders or millionaires who have made bad decisions. This is simply not true. The truth is that debt from medical emergencies, the strain of paying your bills while unemployed and many other challenges can put people in a difficult situation. Bankruptcy offers relief from the burden of debt, and thousands of people in Arkansas file for bankruptcy every year.
Myth 2: If you file for bankruptcy, you will lose your house, your car and more.
While some types of bankruptcy may require you to sell some of your assets in order to pay off debt, much of the property you rely on may be exempt from this process. You can also explore other types of bankruptcy that allow you to restructure your debt rather than liquidating your assets.
Myth 3: You will lose your job if you file for bankruptcy.
Some people believe that a bankruptcy filing will impact their career, but that isn’t necessarily the case. Discriminating against you because of a bankruptcy filing could be considered illegal discrimination.
Myth 4: Filing for bankruptcy will permanently damage your credit.
While your bankruptcy filing will appear on your credit report for some time, that doesn’t mean you’re your credit is ruined. It is possible to rebuild your credit score after bankruptcy by making small purchases and repaying them as soon as possible.
Myth 5: It is always better to just pay your debts.
Many people take pride in keeping their promises, but it is not always a better idea to pay your debts. Especially if you need to draw large amounts of money from your savings or your retirement accounts, you may do more harm to your finances by paying off these debts. Bankruptcy could restructure your repayment schedule so that you can better manage your bills, and some of your debts could be discharged entirely.
While there are many myths about bankruptcy, the truth is that this process could offer you relief from the burden of debt and help you reach a stronger financial future.