5 myths about bankruptcy

On Behalf of | Jul 23, 2023 | Bankruptcy, Chapter 7 |

In Florida, individuals needing financial assistance to get out of their debt should not be afraid to file for bankruptcy. However, many people balk at the mention of bankruptcy because of the various myths surrounding financial assistance. Five myths about bankruptcy include lifetime negative impacts on credit reports, a spending spree before filing for bankruptcy will not be paid back, all debt is discharged, you won’t lose anything and you are financially irresponsible. Break these myths with the truth about filing bankruptcy below:

5 myths about bankruptcy

Bankruptcy negatively impacts your credit forever

Bankruptcy doesn’t give you a poor credit score for the rest of your life. You will have this bankruptcy remain on your credit report for seven to ten years and have limited access to credit. Be prepared that you might receive offers for credit cards only weeks after the discharge of your debt.

You don’t have to pay anything back for what you spend right before bankruptcy

Even though credit card debt is discharged with a Chapter 7 bankruptcy, it’s a good idea to remember that courts will consider it to be a form of fraud if you spend recklessly before you apply for bankruptcy.

Bankruptcy discharges all of your debt

Bankruptcy doesn’t just wipe the slate clean and give you a fresh start. Most of your unsecured debts will be discharged, including utility bills, personal loans, past-due rent, and medical bills. Child and spousal support arrearages won’t be taken off for any reason.

People who file for bankruptcy are financially irresponsible

Not all people who file for bankruptcy are irresponsible, but many try to avoid bankruptcy because they fear it means failure. This is a financial remedy all United States citizens can take advantage of at times. Common reasons to apply include the high costs of divorce, medical care costs, and long-term unemployment.

You won’t lose anything in bankruptcy

The truth is that you will lose some things during your Chapter 7 bankruptcy. Any property that doesn’t have an exemption on it will be at risk, as well as those luxury goods that aren’t considered necessary and can be sold to put the proceeds towards your debt obligations.