In these uncertain economic times, the prospect of filing for personal or business bankruptcy can be intimidating. With so many complicated bankruptcy regulations and laws, many people have a misunderstanding of what ‘bankruptcy’ means and how it works. Here, we discuss the common myths about bankruptcy and why it may help you get back on track financially.

When most people think about bankruptcy, they think about a worst-case scenario. This couldn’t be further from the truth. Filing for bankruptcy may provide the relief you need to make way for a fresh start — a new chapter in your life and financial future. In fact, the Bankruptcy Code was created to provide individuals, businesses, and organizations with a fresh start and a way to pay off all or some of their debts. This process can also help those seeking creditor relief, financial freedom, and a chance to rebuild their credit and restore their financial well-being.

Myth 1: Bankruptcy will ruin my credit.

While bankruptcy can have a negative impact on your credit in the short-term, it can be a good long-term solution. Filing a bankruptcy can take years off your credit history and provide you with the time you need to rebuild a strong credit score. In addition, filing for bankruptcy can improve your credit and help you qualify for a loan in the future, as lenders may look more favorably on those who have taken responsibility to resolve their debts.

Myth 2: Bankruptcy can eliminate all my debt.

This isn’t necessarily the case. Generally, filing for bankruptcy does not eliminate all your debt. While most unsecured debts can be discharged, secured debts such as mortgages or student loans are not subject to bankruptcy discharge.

Myth 3: I can file for bankruptcy anytime.

Although the timing of when to file for bankruptcy is an important factor, it is not an immediate solution. Depending on the type and amount of debt that you have, creditors can pursue collections or other legal actions for up to ten years. This means that even after filing for bankruptcy, you may still have to appear in court or continue to pay off certain debts. It’s best to consult with a qualified bankruptcy lawyer to determine which option is right for you.

Myth 4: Only businesses can file for bankruptcy.

Individuals can also file for bankruptcy. In fact, filing for bankruptcy can provide individuals with an immediate and effective way to eliminate or reorganize their debt. Business bankruptcy is different than personal bankruptcy, but its purpose is still to provide the debtor with a way to discharge some or all of their debt.

Myth 5: Bankruptcy will solve all my financial woes.

Sadly, this is not true. Bankruptcy may help you resolve certain debts, however you will still be required to pay down the remaining debt. In some cases, creditors can still pursue collection or other legal actions against you even after your bankruptcy is discharged. You must also remember that your credit score may be affected by filing for bankruptcy.

For Dallas-based families and businesses who are looking for sound legal counsel, a knowledgeable and experienced bankruptcy lawyer should be your first choice. Whether your situation calls for a Chapter 7 or Chapter 13 bankruptcy filing, a qualified lawyer can guide you through the process and help you make the best decisions for your unique situation.

At UpCounsel, we understand that the potential for bankruptcy can be overwhelming, which is why we connect you to experienced Dallas-area bankruptcy lawyers to provide counsel and guidance through every step of the process. Our network of experienced legal professionals can help you understand the local regulations and laws, as well as answer any questions you may have. From small businesses to the Fortune 1000, UpCounsel and its attorney community are here to provide you with the high quality, cost-effective solutions you need to make the best decisions for your financial future.

Topics:

Bankruptcy Definition,

Dallas Bankruptcy Laws,

Bankruptcy Myths