5 Bankruptcy Myths Debunked
Bankruptcy. It’s a word that conjures up strong feelings. Sometimes people facing bankruptcy feel fear, apprehension, or even shame because of their circumstances. With all the misinformation circling around out there, it’s no wonder bankruptcy is a scary prospect for so many. Fortunately, most of the bankruptcy horror stories you hear are just that – stories. At Davis, Ermis and Roberts, P.C., we are determined to educate our clients about bankruptcy and what it can and cannot do for them. Here are five common myths about bankruptcy, debunked.
Myth 1: All Debts Are Forgiven
The Truth: All debts are not created equal. While it is true that bankruptcy will discharge certain debts, such as credit cards and medical bills, you will still be responsible for any debt you owe to the government or to your dependents. This includes unpaid taxes, student loans, fines and penalties resulting from crimes you committed, and child support or alimony.
Some debts, like old income taxes, can be discharged after enough time has passed and if certain conditions are met. A good bankruptcy attorney can help you determine which of your debts would be discharged and which would remain.
Myth 2: You Will Lose Everything
The Truth: Some people picture bankruptcy as a total forfeiture of assets, leaving them homeless, carless and penniless. This is actually very far from the truth. In a Chapter 7 bankruptcy, you are allowed to keep certain exempt assets that are deemed necessary for daily life. As long as you can continue to make payments on home or vehicle loans throughout the bankruptcy, you will be able to keep your house and vehicle. Exemptions can also include work tools necessary for your job, family heirlooms, retirement funds and pensions, public assistance, and good number of personal items.
It’s even doubtful if creditors will come for most of your non-exempt belongings. It depends on whether they could get a good price for them upon resale. For example, things like flat-screen TVs depreciate in value rather quickly, so it’s very rare for creditors to take those.
Myth 3: You’ll Never Get Credit Again
The Truth: Bankruptcy does have credit consequences, but they don’t last forever. It’s true that bankruptcy can affect your credit for a maximum of 10 years. However, that doesn’t mean you can’t start rebuilding your credit immediately after your debts are discharged. The more diligent you are about taking on debt you can afford and repaying it on time, the faster your credit score will rebound. Look for a trusted bankruptcy attorney like the ones at Davis, Ermis and Roberts, P.C., to guide you through the credit rebuilding process.
Myth 4: You’re Bad with Money
The Truth: Too many people blame themselves for filing for bankruptcy. They buy into the stigma that says only someone who lives beyond their means could get into a position where bankruptcy seems like the best solution. This is completely untrue!
Harvard University did a study that showed medical debt is the leading cause of bankruptcies in the US. 62% of all personal bankruptcies are due to medical debt, even though 78% of filers have medical insurance. There are simply many circumstances beyond your control, so don’t let a bankruptcy filing make you feel bad about yourself or your decision.
Myth 5: You Don’t Need a Lawyer to File for Bankruptcy
The Truth: While you can technically file for bankruptcy on your own, an experienced bankruptcy attorney is an invaluable asset. They will make sure you have all the documentation you need, they will be present at court hearings and negotiate with your creditors on your behalf, and they will bring a swift end to creditor harassment. These are only some of the many services we offer at Davis, Ermis and Roberts, P.C.
Call Davis, Ermis and Roberts: Your North Texas Bankruptcy Experts
With a combined 71 years of experience with trial law and bankruptcy, our team knows how to get you through a bankruptcy filing as painlessly as possible. Call on us when you need assistance, and we will guide you every step of the way!