Common Myths About Bankruptcy
The term bankruptcy is often associated with negative feelings such as worry, fear, and regret. You may be worried about losing your home or concerned about your financial future. You may also be afraid of what assets and property you will lose, or fear that a bankruptcy attorney is unaffordable and out of reach. Despite the rumors and myths that sometimes surround it, filing bankruptcy is historically the safest and most cost-effective way to manage the strains and complications that debt can bring.
At the Wynn Law Firm, we are committed to helping our clients understand the entire process of bankruptcy as we help them navigate all of its complexities. Let’s start with debunking a few myths about bankruptcy now.
Myth #1: You’ll lose everything
Anyone who is struggling with debt has received the threatening calls and letters telling you that you’re at risk of losing your home, your car, or even ending up in Jail if you do not resolve their debt. These calls are frightening and creditors use these fears in order to coerce you to make payments that may not be necessary.
First, remember that the person calling you is almost never a lawyer and likely has little to know understanding about Florida law or bankruptcy law and what rights you actually have. Don’t be fooled. For example, in Florida, unlike some other states, your home is one of your most protected assets - especially from non-mortgage debt collectors. Also, there is not any normal situation in which you can get put in jail for failure to pay a consumer debt like what these collectors are calling for - feel free to remind the next caller that the United States outlawed Debtors’ Prisons in 1833.
The truth is, there are different types of bankruptcies that can be used and tailored to insure that a consumer does not have to lose any of the assets that they hold dear if they don’t want to. Bankruptcy is all about weighing what is fair to the consumer and to the creditor, with the scale weighted in favor of the consumer to help achieve the fresh start the bankruptcy code promises. Having a creative attorney who understands how best to use Chapter 7, Chapter 13, Chapter 11, and Chapter 12 to a client’s maximum advantage is key.
Myth #2: Everyone will know if I file for bankruptcy
Your creditors and your bankruptcy attorney will probably be the only people who will know that you’ve filed unless you’re a celebrity or public figure of some sort. Every year, millions of people file for bankruptcy because it is a common and practical way for many individuals, families, and businesses to find relief from debt. There is no reason to feel embarrassed or ashamed about filing bankruptcy.
Myth #3: My credit will be ruined
The answer to this myth is quite the opposite. Most people who file bankruptcy will see their credit score increase immediately after filing? This sounds shocking but it is true. Credit is based on a number of factors, but two of the most important factors revolve around delinquent accounts and high balances. These are the types of things that are immediately washed away when you file bankruptcy.
While yes a bankruptcy stays on your credit report for seven years, that does not mean that it affects your credit score for that entire time. Even with bankruptcy, over time your credit will recover. Restoring and improving credit is a process that anyone can work at. Committing to the process of rebuilding your credit is far easier than trying to deal with the weight of debt any day. Read How to Rebuild our Credit Score for some helpful tips to get you back on track.
Financial hardship comes in many shapes and sizes. As a result of that, each situation of financial hardship must be evaluated with care and attention to detail. Whether you are experiencing difficulties in your personal finances or your business’s finances, it is always in your best interest to know what your rights and remedies are.Contact the Wynn Law Firm today to see for yourself the relief and protection that bankruptcy can provide to your situation.