At Daigle Law Office, we want to make sure that common bankruptcy myths are debunked so that you clearly understand why bankruptcy could benefit you. There are many common misconceptions and a lot of stigma surrounding bankruptcy. People hear about bankruptcy and think that filing would destroy their credit but erase all their debts forever. Or they think that filing for bankruptcy means they are failures. We want you to know that these bankruptcy myths are simply not true. Bankruptcy can give you the relief you need to move on from your debts and start fresh. We’ll clear up these myths below and explain why bankruptcy can help you if you’re behind on your bills.
Myth #1: If I File for Bankruptcy, I Have Failed at Life
Many people think that filing for bankruptcy means you have hit rock bottom. This misconception may prevent people who really need this tool from using it. Bankruptcy is a powerful legal and practical tool for helping you out when you have debts that are hard to pay. It does not mean you have failed. In fact, taking advantage of the bankruptcy system is a sign that you are using appropriate means to take control of your financial future. There were 486,613 bankruptcy filings nationwide between June 30, 2023 and June 30, 2024. That’s a lot of people using a very common tool for managing debts. You could be one of those people soon.
Myth #2: Bankruptcy Will Destroy My Credit Forever
Many people think that bankruptcy will permanently ruin their credit. In fact, the opposite of this myth is true. Bankruptcy could actually improve your credit in the long term because it eliminates many common debts. Yes, your credit will not be great in the short term. But if you take the right steps, you could rebuild your credit quickly. When you work with Daigle Law Office for your bankruptcy filing, we automatically enroll you in the 720 Credit Score rebuilder program at no additional cost. Our clients have found that following this program can help boost their credit scores to 720 in approximately 18 months.
Myth #3: All My Debts Will Go Away Forever
Unlike many people think, bankruptcy does not erase all of your debts forever. Bankruptcy can only eliminate dischargeable debts. Dischargeable debts include credit card balances, overdue utility and cell phone bills, overdue rent, medical bills, personal loans, and a few other types of debts. Debts that cannot be discharged in bankruptcy unless you give up the property include mortgages and car loans. If you have questions about which debts you can eliminate by filing for bankruptcy, please contact Daigle Law Office for a consultation.
Myth #4: Bankruptcy Is Too Expensive For Me
Some people think that filing for bankruptcy is not worth it because it’s too expensive. In truth, the money you pay a lawyer to file your bankruptcy could be less than the interest and fees you owe on your debts. Without declaring bankruptcy, unpaid debts could cost you many thousands of dollars over time. So, the up-front cost of legal representation and filing fees is a drop in the bucket. Paying for a bankruptcy lawyer is a necessary investment in your financial future that will benefit you years down the road.
Myth #5: Bankruptcy Will Make Me Even Poorer
The goal of bankruptcy is not to take the clothes off your back. Rather, it aims to discharge unpaid personal debts that you have difficulty paying and/or to set you up with a payment plan aligned with your actual financial circumstances to reasonably pay off creditors. The bankruptcy court will not take away essential personal belongings and leave you on the street. There are numerous exemptions in the bankruptcy laws allowing you to keep personal items. Because these exemptions are complicated, it’s best to work with a seasoned bankruptcy lawyer who can determine which exemptions apply to you.
Myth #6: I Can Only File for Bankruptcy Once
Again, the idea that you can only file for bankruptcy once is simply not true. You can file for bankruptcy as many times as you need to. However, if you file for a second bankruptcy quickly after the first one, you will not be eligible for debt forgiveness. There is a waiting period that varies depending on the chapter under which you file. For example, if you file a second Chapter 7 bankruptcy, you must wait to file for at least 8 years after the first Chapter 7 filing to qualify for debt forgiveness. If you’re considering filing a second bankruptcy, we highly suggest seeking legal advice about the timing and how you can benefit from a second filing.
Myth #7: I’ll Never Be Able to Buy a House If I File for Bankruptcy
Some people think that filing for bankruptcy means they can’t buy a house in the future. While it’s true that your credit score may be low now, it doesn’t preclude you from homeownership. First, as described above, there are steps you can take to improve your credit score to around 720 in about 18 months. Second, home loans, such as FHA loans, are available for people with low credit scores. You’ll need to wait two years after your Chapter 7 bankruptcy discharge to qualify for an FHA loan (the rules are slightly different for Chapter 13), and in that time, you can work on rebuilding your credit.
Myth #8: Your Spouse Must File for Bankruptcy with You
It’s a myth that your spouse must file for bankruptcy with you. You can file for bankruptcy individually, even if you’re married. Discuss with your bankruptcy lawyer whether filing individually makes more sense for you. Some reasons to file individually include the following:
- Separate finances from your spouse
- Debts only in your name
- You signed a prenuptial agreement regarding finances
- Your spouse already filed for bankruptcy, but their debts aren’t dischargeable yet
Consult with a qualified and experienced bankruptcy lawyer for more information about filing individually if you are married.
Your Local Bankruptcy Lawyers Debunk Myths & Provide Trusted Advice
Are you looking for a dependable, experienced bankruptcy lawyer who can help you get back on your feet? You’ve come to the right place. Daigle Law Office’s attorneys can provide you with experienced Massachusetts bankruptcy advice. We help clients dealing with tough situations who need solid and reliable information from knowledgeable local lawyers. Daigle Law Office’s attorneys consult with clients on Cape Cod and in eastern Massachusetts. To schedule a free initial consultation, call 508-771-7444 or use our convenient Contact Form.
