By the end of last year, overall bankruptcy filings rose 16.8%, with business and personal bankruptcies rising for the first time in a decade. However, there are many misconceptions that still prevent many potential applicants from starting the process. This blog will discuss more common myths about bankruptcy to help you better navigate it.
Common Misconceptions About Bankruptcy
Misconception: Only Irresponsible People File for Bankruptcy
Truth: Many people wrongly believe that bankruptcies are a sign of financial irresponsibility, but the reality is very different. From crushing medical bills to losing a job, bankruptcy can happen to anyone.
Misconception: You Can Only File Once
Truth: Another common myth is that you can only file for bankruptcy once in your lifetime. While there are statutes of limitations on how long you need to wait between bankruptcies, the government understands that people face various financial difficulties that may force them to file more than once.
Misconception: The Process Is Too Difficult and Expensive
Truth: Some prospective filers might think starting the bankruptcy procedure is too complicated, especially when they try to do it alone. However, hiring an experienced bankruptcy lawyer will help facilitate the process and ensure it goes as smoothly as possible.
Misconception: Your Business Will Fail After A Bankruptcy
Truth: Many business owners worry that declaring bankruptcy will put their companies out of business. But in reality, the government offers ways to keep running your business as you improve your financial situation. Take the airline sector as an example. Many airline carriers, like Delta, have gone through Chapter 11 bankruptcy, reformed, and kept flying without halting their operations.
Misconception: You Can Max Out Your Credit Cards Before Filing for Bankruptcy
Truth: Running up a large credit card bill before declaring bankruptcy is risky and could land you in legal trouble. The government has strict regulations regarding fraud, and doing so has severe consequences, including fines or even prison time for more serious cases.
Misconception: All Debt Is Eliminated Through Bankruptcy
Truth: Many people file for bankruptcy hoping to start over financially, but that’s not always the case. Filing for Chapter 7 bankruptcy may eliminate most unsecured debt, including medical bills, credit card debt, and more. It can also deal with secured debt but won’t get rid of everything. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, you’ll still be responsible for alimony, child support, college loans, and other tax obligations.
Misconception: You Might Lose Your Job Over A Bankruptcy
Truth: Many people are scared that going through this process will cause them to lose their jobs. Thankfully, federal law makes it illegal for an employer to fire you based on your bankruptcy status.
Our Lawyers Are Here To Help
Filing for bankruptcy is complicated, but our experts at Todd Cushner & Associates are here to help you. Please contact us if you have any questions or would like to schedule a consultation with one of our attorneys today.
