Many people struggling with debt are hesitant to take a big step in regaining control of their finances: filing for bankruptcy. This hesitancy often stems from feelings of fear, guilt, shame, or apprehension of the social stigma associated with bankruptcy. However, these feelings are often based on misconceptions about the process.
Assumptions People Make About Bankruptcy
There are a number of assumptions that people wrongly assume about bankruptcy and those who benefit from bankruptcy relief. A recent article by US News lists a few of the big misconceptions about bankruptcy. These misconceptions include:
- Bankruptcy is for people who are financially irresponsible - While there will always be a few people who are irresponsible with credit cards and debt, most of the people that file for bankruptcy are hard-working Americans who are experiencing financial difficulties. Circumstances such as job loss and prolonged unemployment, a medical emergency, or divorce may leave people struggling with a large debt burden.
- Bankruptcy ruins credit - Filing for bankruptcy will initially lower people's credit scores. However, within a few months, people will be able to begin to rebuild their credit.
- Bankruptcy will get rid of all debts - Well, no. Bankruptcy will get rid of most debts, but not all. Certain obligations like child support and student loans cannot generally be discharged through bankruptcy.
- Bankruptcy is the easy way out - Yes, through bankruptcy financially burdened people are able to achieve a fresh start, but it is not an easy road to travel. The two main bankruptcy chapters, Chapters 7 and 13, that are used by individuals each have positives, but each has drawbacks too. For instance, filing for Chapter 7 bankruptcy may require people to sell property that they would prefer to keep; and Chapter 13 requires people to enter into a repayment plan that last 3 to 5 years, a time period during which most of debtors' cash will be spent to pay down the debts they owe.
Speak With a New Jersey Bankruptcy Attorney
You may have misconceptions about bankruptcy, speak with an experienced attorney to help clarify them. Our New Jersey attorneys can help guide you with compassionate advice, and we offer a FREE initial consultation.