Despite their best efforts, many borrowers find themselves unable to keep up with their debts. If you have a hard time making minimum payments each month and constantly receive calls from collection agencies, bankruptcy can provide a crucial lifeline. Unfortunately, bankruptcy is subject to a variety of myths and misinformation, which could keep you from getting the financial relief you need.
Debunking Common Myths About Bankruptcy
1. People Who File Are Irresponsible
While some borrowers seeking bankruptcy protection need to improve their money management skills, most are the victims of circumstances beyond their control. Many borrowers are driven into bankruptcy by long-term unemployment, legal expenses, or divorce, but many experts agree that health care costs were once the primary cause of bankruptcy petitions.
2. Bankruptcy Erases All Past Debt
Although most unsecured debts can be discharged in both Chapter 7 and Chapter 13 bankruptcy, many types cannot. For instance, student loans typically cannot be included in a bankruptcy petition, and neither can some unpaid taxes or child support arrears. Before filing, speak to an attorney who can determine whether your debts are eligible for discharge.
3. Bankruptcy Permanently Damages Your Credit
Shortly after filing for bankruptcy, most borrowers will see a drop in their credit rating, but this impact isn’t necessarily long-lasting. Bankruptcy filings are typically removed from credit reports after seven to 10 years, but you can begin rebuilding your credit almost immediately. Without the financial pressure of insurmountable debts, many borrowers are surprised at how quickly they can improve their credit score after a bankruptcy.
Filing for bankruptcy can be a valuable tool for restoring your financial health. The Law Office of J. Baron Groshon has been serving the Charlotte, NC, area for over 28 years, providing guidance to borrowers who struggle to meet their financial obligations. To learn more about the benefits of filing bankruptcy, visit their website, or call (704) 342-2876 to start exploring your legal options.