The Biggest Bankruptcy Myths, Busted
Bankruptcy provides borrowers with a chance to discharge their debt so they can get a fresh financial start. Unfortunately, there are many reasons people are hesitant to file bankruptcy. Many of these reasons stem from the fact that there are so many myths and misconceptions surrounding bankruptcy, and borrowers tend to believe them. Below, our Orlando bankruptcy lawyer outlines the biggest myths we have heard at our law firm, and the truth behind them.
You Can Discharge All of Your Debt in Bankruptcy
Unfortunately, it is not always possible to discharge all of your debt in bankruptcy. A Chapter 7 bankruptcy is the most common way debtors discharge most or all of their debt during the process. Even a Chapter 7 bankruptcy, though, will not discharge all of a person’s debt.
Student loans, for example, are incredibly difficult to discharge during bankruptcy. Other types of debt, such as child support and tax debt, are not dischargeable during the bankruptcy process. During other types of bankruptcy, such as a Chapter 13, most of the borrower’s debt is not discharged, but it is restructured into a more affordable repayment plan.
Property is Seized During Bankruptcy
It is true that during certain types of bankruptcy, such as Chapter 7, a borrower may lose some of their property. Assets are sometimes seized and sold so the proceeds can be distributed among the creditors to help cover the debt owed. Florida, though, has some of the most generous bankruptcy exemptions in the state. These exemptions can help protect a borrower’s property from being sold during the bankruptcy process.
Bankruptcy Will Permanently Ruin Your Credit Score
It is true that bankruptcy will cause your credit score to take a slight hit, regardless of the type you file. It is also true your credit score may take years to recover once you file. However, the longest a bankruptcy will stay on your credit report is seven to ten years. Your credit score, on the other hand, will start to improve in just a matter of one or two years.
People Who File Bankruptcy are Irresponsible
This is perhaps the biggest myth that causes people to put off filing bankruptcy, even though they know that it will provide a fresh start. Truthfully, the vast majority of people who file for bankruptcy have simply found themselves in situations that were beyond their control. Divorce, job loss, and medical debt are the three main causes of bankruptcy and they have nothing to do with the responsibility of the borrower.
Our Bankruptcy Lawyer in Orlando Can Help with Your Case
There are many myths about the bankruptcy process, which is why you need sound legal advice when going through the process. At Anderson & Ferrin, P.A., our Orlando bankruptcy lawyers will answer all of your questions and inform you of what you can expect so you are properly prepared for every step of the way. Call us now at 407-412-7041 or contact us online to schedule a free consultation.