3 Common Myths About Bankruptcy

3 Common Myths About Bankruptcy

Are you feeling in over your head with debt? Intimidated by bankruptcy? If so, you’re certainly not alone.

Bankruptcy carries many negative connotations that sometimes scare away the very people it’s meant to benefit. But, most of the notions are just myths. Don’t let these ones deter you from getting your finances back on track with bankruptcy.

You have a low income

Usually, we think of people who have trouble with money as having a low income. However, those who make a high income may still have plenty of financial demands to keep up with.

As master’s degrees have become increasingly required for leadership positions, higher-income individuals are feeling the pressure to take on these expensive educations.

The job market has also made another change. Large, high-paying companies don’t tend to hold on to employees for decades anymore. Long-term employees who have earned a higher income can often be replaced by newer, lower-salary workers.

Your credit score is ruined forever

Bankruptcy will certainly take a hit on your credit score. Low credit can limit your living and vehicle opportunities. However, this stain on your credit history can fade out.

In fact, a Chapter 13 bankruptcy imposes a long-term repayment process that can help debtors practice money management techniques to pay off their debts. Maintaining these positive money management strategies for a few years after filing bankruptcy can correct your score.

You’re bad at managing money

This myth may be true for some, but not all. Sometimes unforeseen events can take a huge financial toll. For example, starting your own business may have been a great idea until you found out you and your spouse were pregnant with twins.

An unforeseen illness could also impose costly expenses. You can’t always be prepared for these types of situations. But if unexpected events caused your finances to plummet, it’s important to take the steps to correct them sooner, rather than later.

Learn more about bankruptcy as it applies to you

There are different types of bankruptcy that have different advantages and disadvantages. There are also certain eligibility requirements to file for bankruptcy.

To learn more about whether filing could benefit your unique situation, contact a bankruptcy lawyer for help. An attorney can guide you through your options — explain the benefits and drawbacks, without the myths.