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Misconceptions Surrounding Bankruptcy

     There are several misconceptions surrounding bankruptcy and the individuals who seek the relief it can offer. The biggest one of them is assuming that all individuals who are seeking financial reprieve through bankruptcy have done so because they couldn’t fight the urge of credit card spending. This however, is not the case for many of the people that find that they are in need of filing bankruptcy. Here’s a look at some of the other folklore surrounding bankruptcy.

Individuals that file for bankruptcy are financially irresponsible: Although there are some cases in which individuals need to file for bankruptcy because of their own financial irresponsibility this is not always the case. It is more likely that an individual finds themselves in this situation because of one of the following events: job loss, divorce or illness.

Bankruptcy clears away all past debts: If you are looking for a be all to end all for debts, bankruptcy is not where you will get it. Not all debt can be cleared away when filing for bankruptcy. Several, including alimony, child support, restitution from a crime, tax debt and student loan expenses are just a few of the debts that cannot be expunged. Although bankruptcy does give individuals a fresh financial start it does not completely clear you from all of your outstanding debt.

It’s a good idea to spend with reckless abandonment before bankruptcy: People should not assume that just because they are about to file for relief that they can max out their current credit. In the eyes of the court, this type of behavior is seen as fraudulent. Many times the debt that is racked up in the ninety days before your discharge will need to be paid back. You will not get away with spending recklessly and expecting it to be discharged.

Bankruptcy permanently ruins your credit: Although it is more difficult to obtain credit in the months after you have filed for bankruptcy it is not impossible. Most bankruptcy attorneys and financial advisors recommend obtaining a secured credit card when you first are relieved of your debt through bankruptcy. A secured credit card can be obtained through a bank or other financial institution. This type of credit card requires a bank deposit to be drawn against.

If you are considering bankruptcy to get relief from debt that is piling up and creditors hounding there are still some things to think about. First is the expense of filing for bankruptcy. Hiring an attorney to represent you in filing for bankruptcy is the best option. This can cost between nine hundred and fifteen hundred dollars depending on your attorney and the area in which you reside.

It is also crucial to consider the difference between chapter 13 bankruptcy and chapter 7. In chapter 13 bankruptcy the court will assist you in reorganizing your debt and you will be in charge of paying expenses, like your house payment and such while living very modestly. Chapter 7 discharges certain debts but in doing so you could have to sell secured assets to assist in paying some of your debt back. Talk with a local bankruptcy attorney to see what option is the best for your situation.

Article Source:

Bohikian Law Group specializes in chapter 7 and chapter 13 bankruptcies in Michigan. Contact us today to find a bankruptcy attorney that will help you in debt relief at today.

Posted on 2016-07-31, By: *

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Note: The content of this article solely conveys the opinion of its author.

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