No one ever wants to think that they will face bankruptcy, but it is likely more common than you think. According to the U.S. Courts, 544,463 people filed for bankruptcy in 2020. The process is also not as scary as you may think, though there are many myths and embellished tales involving it.
If you are facing financial struggles and considering bankruptcy as a solution, here are some myths surrounding the process that you should understand.
Myth 1: Bankruptcy ruins your credit forever
While you may find that you have limited access to credit while a bankruptcy shows up on your report, usually for seven to 10 years, you can improve your credit score quickly once it is gone.
Myth 2: Bankruptcy gets rid of all your debt
A good chunk of your debt gets discharged when you file Chapter 7 bankruptcy, including credit cards, personal loans and medical bills. However, debt linked to a child or spousal support, student loans and tax debt is not dissolvable.
Myth 3: It is hard to file for bankruptcy
In most cases, it is actually quite easy to file for bankruptcy. You just need to make sure that you have legal guidance to prevent you from filing the wrong chapter or improperly citing property exemptions. Plus, you may find that other alternatives will work better for your particular circumstances.
If you are feeling overwhelmed and can not see a way out from your crushing debt, bankruptcy may be the best way to get back on stable financial ground. Do not let any myths out there discourage you from this potential solution.