Considering bankruptcy can be an overwhelming process, and for many, the prospect of navigating this legal journey can lead to an exploration for finding answers. If you or someone you love is thinking about filing bankruptcy, Jacoby & Jacoby would like to remind you to be careful about where you get your information from. There are numerous bankruptcy myths out there, and heeding their advice can cause more harm than good.
Some of the most common bankruptcy myths our legal team hears from clients often revolve around what impact filing bankruptcy will have on and individual. A few of these myths include:
- Filing bankruptcy is a sign of financial failure – This myth is entirely false. Millions of Americans and American businesses have filed bankruptcy in recent years, and many have gone on to regain their financial health. Times have been tough, especially after the collapse of the housing market and one of the worst economic recessions in U.S. history. It goes without saying that many people also file bankruptcy after tragedies, including accidents and illnesses. Bankruptcy is simple not a tell-tale sign of financial failure.
- Filing bankruptcy will cause you to lose everything – This myth may have had some help from cartoonish renditions of "going bankrupt," where characters have nothing but the shirts on their backs. When you go bankrupt in Monopoly, for example, you lose it all. Real bankruptcy under the U.S. Code is not at all like this. In fact, state and federal exemptions allow bankruptcy filers to protect and keep many of their personal belongings and assets. Bankruptcy can also be a powerful tool to defend against foreclosure.
- Bankruptcy ruins your credit permanently – Bankruptcy does not permanently scar you or follow you for the rest of your life. This may be one of the most common myths about bankruptcy, but it also one of the most incorrect. While a bankruptcy filing will be apparent on a credit report, it is not permanent or ruinous. Consumers have the ability to rebuild their credit and with responsible financial practice often reach scores higher than they've ever had before.
Unlike these myths may lead you to believe, bankruptcy can be a powerful option for finding much-needed relief from debt. Bankruptcy is a tool for helping those in need, and when used wisely and with the help of experienced professionals, it can be precisely the tool people need to obtain a fresh start and a brighter financial future.
If you have questions about bankruptcy and would like answers from trusted Long Island bankruptcy attorneys, contact our firm today