Misconceptions that Deter People from Seeking Bankruptcy Relief

Bankruptcy is a remedy designed to give people in financial trouble a path to a fresh start. It carries no penalties as long as a debtor pursues it honestly and in good faith. However, many people are still reluctant to file for bankruptcy, often out of fear that it carries a stigma that will affect them for life.

Here are some of the myths that deter people from seeking bankruptcy relief they are entitled to:

1. Bankruptcy means you’re a failure — This is utterly untrue. Bankruptcy is designed to help people who are struggling financially. It’s not a reflection of your character or your worth as a person or as a contributing member of society.
2. You’re not poor enough to qualify — Bankruptcy relief is generally available to anyone unable to repay their debts on time, even if they have assets and sources of income. Your financial state is only relevant to the type of bankruptcy you may be allowed to file.
3. You will lose everything you own — In reality, bankruptcy law provide exemptions that protect certain assets from liquidation. Most Chapter 7 filers can keep virtually all their property. Chapter 13 filers can keep even nonexempt property by paying back some of their debt.
4. Bankruptcy will ruin your credit forever — While bankruptcy will have an impact on your credit score, it’s not a permanent stigma. People are often able to start rebuilding their credit within a few months after filing for bankruptcy.
5. Bankruptcy will make it hard to get a job — Federal laws prohibit job discrimination on the basis of bankruptcy. Although employers can run a credit check on job applicants, they cannot deny them employment just for having a bankruptcy of record.
6. You can’t buy a house or a car ever again — On the contrary, after a Chapter 7 discharge, you can qualify for a FHA or VA mortgage in two years or a conventional mortgage in three years. You may be able to buy a car with a loan right after a discharge, though your interest rate will be lower if you wait six to 12 months.
7. Bankruptcy is too expensive — There are court filing fees for bankruptcy, ranging from $313 for Chapter 13 to $338 for Chapter 7. There are also attorneys’ fees and other costs. But on balance, the relief from debt offered by bankruptcy usually outweighs the expense.
8. Bankruptcy is too complicated — Although there are multiple forms and they must be filled out correctly, the process is straightforward, especially with the guidance of an experienced bankruptcy attorney.

Jeff Field & Associates assists people with debt problems throughout the Atlanta metropolitan area and beyond. We can help you understand the bankruptcy process and how to use it to advantage in your situation. We have offices in Bogart, Douglasville, Gainesville, Lawrenceville, Marietta and Decatur. To schedule an appointment, call 404-381-1278 or contact us online.