Personal Bankruptcy - Three Myths Explained

Debt collectors can be scary for many people, but then again, so can the idea of filing for bankruptcy protection. While bankruptcy should never be used as an easy out to wipe out debt and go back to old habits, bankruptcy can be a valuable tool for those who need it. Whether you are a facing insurmountable debt or not, the following myths may have you confused as to the reality behind bankruptcy protections under the law.

Myth #1: Bankruptcy is a tool for people who make bad financial choices.

In some cases, this is certainly true. However, not everyone who files for bankruptcy is a bad person with uncontrollable shopping habits. Sometimes, regardless of the best efforts at planning and budgeting, bad things happen. One lengthy hospital stay for a serious illness, one on-the-job injury or one auto accident can ruin even the best financial portfolio, even if the individual has health care insurance. Recent changes in health care insurance laws and increases in premiums and deductibles can further impact a person's ability to pay bills, making a bankruptcy filing necessary.

Myth #2: Bankruptcy is an easy way to get out of paying bills.

This is also incorrect. There is nothing easy about the bankruptcy process. An attorney must be retained, and every penny of the individual's income and assets must be scrutinized and accounted for throughout the entire process. Bankruptcy courts and trustees will interrogate the petitioner over every penny spent during the bankruptcy proceedings. In addition, from the date an attorney is retained until the date the bankruptcy is discharged, many clients can spend years involved in bankruptcy proceedings. This is not a "get out of debt free" card.

Myth #3: You can never get credit again after filing bankruptcy.

This is another myth that is commonly tossed around. While it is difficult to obtain credit with a bankruptcy on your credit report, it can be done. You will pay higher interest rates than other borrowers, and lenders will see you as a greater risk. However, there are still lenders that will be willing to take a chance on you to help you rebuild your credit and move on with your life after bankruptcy.

If you are facing amounts of debt that you are struggling to deal with, it is important to get help right away to protect your credit and your assets as much as possible. For more information, contact the Law Office of Michael Alfano or a similar firm.