Every year, hundreds of thousands of people achieve lasting financial freedom by filing for bankruptcy. Still, persistent myths on the topic remain. Despite the benefits, many are not clear on the processes and procedures involved in obtaining debt relief. Below are three of the most common misconceptions.

3 Common Bankruptcy Myths Debunked

1. All Bankruptcy Is the Same

The average consumer files either Chapter 7 or Chapter 13 bankruptcy. With the former, the courts eliminate most unsecured debt. Through the latter, filers address what they owe via a long-term payment agreement. As such, the process is not the same. Chapter 7 is best-suited to individuals who have significant debt and little or no income. Chapter 13 is ideal for those who have the financial resources to repay their debt. While both options help filers achieve relief, each takes a different path toward that goal.

2. I'll Never Obtain Credit or a Loan Again

While it's true that bankruptcy will be visible on your credit report for about 10 years after filing, this fact in no way prohibits you from opening new lines of credit. Most lenders are happy to work with clients who have filed for bankruptcy in the past. Also, you can start rebuilding credit right away post-filing, increasing your odds of securing future loans. Opening a secured credit card—which essentially works as a debit card, wherein you prepay a balance and spend off of that amount—is a smart first step.

3. All My Debts Will Be Erased

It's best to understand what is and isn't erased before you decide to file. Chapter 7 eliminates certain types of unsecured balances, like credit card debt, medical bills, and past-due utility costs; it doesn't wipe away student loans, child or spousal support obligations, or tax debts. Chapter 13 might reduce the total overall amount you owe, but it won't eradicate it, and you’ll have to pay much of that sum.

Explore the countless benefits bankruptcy provides by reaching out to Robert A. Schwartz. For more than three decades, he has been providing individuals and businesses with quality, tailored bankruptcy services throughout Monroe County, NY. He offers guidance through every step of the process to protect your rights and best interests. Call (585) 334-4270 to schedule a meeting to discuss your situation, or visit him online to schedule a free case evaluation today.