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Bankruptcy

Misconceptions About Bankruptcy

Learn How Bankruptcy May Benefit You

For consumers to be informed about bankruptcy they should obtain the advice of an attorney.  As a result of various myths and misconceptions about bankruptcy, many people don't consider filing for bankruptcy as a possible remedy to their debt problems. This is unfortunate since bankruptcy may provide the most feasible and practical solution to a person's financial predicament.

It has always amazed us to see the number of clients who, after having bankruptcy explained, said such things as, “Is this legal?” or “I wish I knew about this a year ago,” or “I feel like a heavy burden has been lifted from my shoulders.”  They realize that they now have a way of handling their devastating financial problems.

Too often people in debt try to resolve their situation by borrowing more money (e.g., refinancing their home, taking cash advances on their credit cards, or asking relatives for a loan).  In fact, what they are doing is burying themselves further and further in debt and just delaying the inevitable – the time when they will no longer be able to pay their bills.  People should be aware that bankruptcy is a financial alternative, and by understanding the facts about bankruptcy they can properly evaluate its potential benefits.  There are many myths and misconceptions about bankruptcy, but we will focus on three common ones.

Misconception #1 — You Must Be Broke

You do not need to be destitute in order to file for bankruptcy.  So if you are employed, or you own a home, a car, or other assets (e.g., jewelry, furniture, a television, or have retirement funds such as a 401(k), IRA, or pension) and thought you weren’t eligible to file for bankruptcy, you’ll be surprised to know that not only can you file for bankruptcy, but you also will probably be able to keep most, if not all, of your assets.

Remember to keep in mind that bankruptcies are filed by every segment of the public (i.e., people from all different backgrounds, occupations, and incomes).  However, since there are different types of bankruptcies, a person’s individual financial condition and goals will determine what type of bankruptcy is best.

Misconception #2 — No Credit For Seven Years

A common misconception is that a person cannot get credit for seven years after filing bankruptcy.  There is no law as to when a person can obtain credit.  Theoretically, a person can get credit again at any time.  Realistically though, you will not get credit until you take steps to make yourself worthy of credit.  So it is important to work toward reestablishing your credit once you have filed for bankruptcy.  Some suggestions for doing so include having a co-signer, obtaining a passbook loan, or applying for a secured credit card loan. 

Misconception #3 — The Stigma

Many people feel there will be a tremendous stigma attached to their filing for bankruptcy.  There is no question that many years ago there used to be a stigma associated with bankruptcy. This view has change primarily because bankruptcy is now much more common.  In 2012, over 1,300,000 bankruptcies were filed in the United States and in Massachusetts over 16,000 cases were filed.

Usually the stigma of bankruptcy is only in a person’s mind.  People do not realize that many individuals they associate or who are friends have filed for bankruptcy.  However, you would not know about their bankruptcies unless they told you.  After you file for bankruptcy you do not walk around with a large sign saying you are in bankruptcy.  So, the only people who are going to know about your filing will be your creditors and anyone you decide to tell.

Contact The Law Firm of Ullian & Associates, P.C., To Learn More

To schedule a free consultation to discuss your options for a fresh financial start with an experienced bankruptcy attorney, contact the firm online or call 781-848-5980.

The Law Firm of Ullian & Associates, P.C., is a debt relief agency. The firm helps people file for bankruptcy relief under the Bankruptcy Code.

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