Although many people go through the bankruptcy process each year, there is still quite a bit of confusion about what to expect when filing. This leads to misconceptions and myths surrounding the subject. If you are considering declaring bankruptcy but are hesitant to proceed because of common fallacies, consult the guide below to garner some clarification.

3 Common Misconceptions About Bankruptcy 

1. It Causes You to Lose All Your Assets 

One of the most common misunderstandings about bankruptcy is that anyone who files will automatically lose all their assets. However, every state has an extensive list of exemptions regarding property that cannot be seized in a bankruptcy. This means a large percentage of debtors never actually lose anything. A bankruptcy attorney will go over all your options with you to ensure you are clear on which assets will be protected should you choose to file.

2. It Will Eliminate All Outstanding Debt

Another mistaken belief is that bankruptcy will completely eliminate all forms of debt. In reality, bankruptcy laws don’t typically allow for secured debts to be erased, such as student loans, taxes, or child support obligations. However, both Chapter 7 and Chapter 13 bankruptcies are designed to alleviate financial deficits caused by unsecured debt incurred from credit cards, personal loans, and medical bills. 

3. It Will Ruin Your Credit Forever 

While bankruptcy will be disclosed on your credit report for a certain length of time, it will not become a permanent part of your credit history, nor will it ruin your creditworthiness. In fact, declaring bankruptcy often provides you with the clean slate needed to start building your credit score back up if it was affected by missed or late payments and high credit card balances. Within no time, you should be able to start acquiring new lines of credit.

Once you’re armed with the truth about bankruptcy, it will be much easier to understand how this can be a viable solution for getting rid of insurmountable debt. The legal team at the practice of Frances H. Hollinger, Attorney at Law has been entrusted to help numerous Foley, AL, residents declare bankruptcy and regain financial freedom. They will provide you with a thorough assessment of your current finances along with all the information needed to make an educated decision on filing. Give them a call today at (251) 943-9030 to schedule an appointment, and visit them online to learn more.