Many people are hesitant to even consider bankruptcy. This is due to numerous myths that continue to persist regarding the practice.
The truth of the matter is that bankruptcy can be highly useful to those in massive debt. For many, it is the only option to get their finances back on track. Here are some of the most common myths you might still believe about filing for bankruptcy.
Myth #1: Bankruptcy shows financial carelessness
Unfortunately, many people have a negative perception of others who need to file for bankruptcy. They wrongly assume these people have been careless with their money and deserve to suffer as a result. The reality is that anyone can end up filing for bankruptcy.
Some people suffer from long-term unemployment and end up racking up massive amounts of debt to stay afloat. Other people suffer from a devastating illness, which causes them to accumulate large medical debt. These tragedies can happen to anyone. Filing for bankruptcy is never a sign of personal failure.
Myth #2: You will lose your house and all your other assets if you file for bankruptcy
Another reason people are hesitant to consider bankruptcy is they assume they will lose their houses or their cars. In many cases, you receive a reasonable exemption amount, allowing you to keep your home, car and other eligible assets. If you have an expensive piece of artwork in your home, then you may need to relinquish that. However, you can retain all the necessities.
Myth #3: Everyone will know you filed for bankruptcy
Filing for bankruptcy can be embarrassing. One common myth is that everyone has to know you filed. While it is part of the public record, you have to pay to access those records, and it is not likely your friends will do that. In the event the bank forecloses on your house, your neighbors will find out about that. Fortunately, declaring bankruptcy should prevent that from occurring.