Bankruptcy Myths

Understand the Facts of Bankruptcy

There is a great deal of misinformation regarding bankruptcy. While some of these "bankruptcy myths" may be exaggerations or statements that seem to fall short of the truth, far too many are just flat out wrong. When you are exploring your debt relief options and whether or not you should file for bankruptcy, it is of the utmost importance that you have the factual information you need to be successful. At Avery Law, our Idaho bankruptcy attorneys make client-education one of our top priorities, as supplying you with valuable and credible information can make all the difference in the outcome of your case and in your life after bankruptcy.

Our legal team has debunked some of the most common bankruptcy myths we receive from clients:

Myth #1: Bankruptcy is only for financially irresponsible people

This is simply not true. While everyone's situation is unique, our firm has met and worked with countless individuals and families who have suffered financial setbacks as the result of unforeseen and unfortunate circumstances, including injuries and illnesses and job loss. In the wake of America's economic decline, more and more people from all walks of life have found bankruptcy the most beneficial way to gain control of their finances and debt.

Myth #2: Filing for bankruptcy solves all financial problems

This is a common and maliciously misleading myth. Anyone considering bankruptcy should realize that it is not a cure-all and that it will not solve all of your financial problems. While not an ultimate or automatic solution, bankruptcy can be an incredibly powerful tool and a benefit for many individuals who have recognized their inability to pay their debts.

By providing a financial fresh start, bankruptcy provides consumers with new avenues of opportunity that they can pursue without the burden of preexisting debt. Debt-free futures are not guaranteed, however, and are only earned as a result of committing to responsible financial habits and planning.

Myth #3: You can charge as much as you want after filing for bankruptcy

This is a myth devastating proportions that no one should believe or act upon. While bankruptcy does allow consumers to discharge certain unsecured debts, such as credit card debt, you should never charge frivolously or max our your credit cards prior to your bankruptcy. Doing so can not only impact your eligibility to file bankruptcy, but can also be considered fraud and grounds for criminal prosecution.

Myth #4: You will lose everything when you file for bankruptcy

This myth may stem from an antiquated conception of bankruptcy and what it means to be bankrupt. The fact is that bankruptcy is not a condition of total loss, total insolvency or a total lack of money and property. U.S. bankruptcy law has been crafted and changed throughout the years, and has come to provide consumers with much needed debt relief. In many cases, consumers are legally permitted to keep and protect a great deal of their property, including exempt property in Chapter 7 cases and nearly all property and assets in Chapter 13 cases.

Myth #5: Bankruptcy ruins your credit permanently

This myth is absolutely false. While bankruptcy will impact your credit, it is far from ruinous and is in no way permanent. Generally, a Chapter 7 bankruptcy will remain on your credit report for 10 years and Chapter 13 for 7 years. Many consumers also find that credit is given at the discretion of lenders and that they are not exempt from obtaining credit or loans after their bankruptcy. Rebuilding your credit is also an essential part of life after bankruptcy. By practicing responsible financial habits, you can easily reestablish your credit and maintain a score much higher than what you previously had before bankruptcy.

Get the Information You Need

Our Idaho bankruptcy attorneys are prepared to answer all of your questions and concerns and to walk you through every aspect of the bankruptcy process. By obtaining the factual information you need from a reliable and qualified source, you can be better equipped to not only take on the bankruptcy process, but to also establish and maintain financial stability in the future.