You’ve wanted to consider bankruptcy to get out of debt for a while, but everything you know about it makes it feel like it would only negatively affect you. People tell you that you’ll have to file with your spouse, and they claim that you are taking the easy way out if you don’t pay back what you owe. Their attitudes have made you reconsider.
Before you decide not to pursue bankruptcy, take a minute to think about the truth and to dispel the myths. Here are three common myths and the facts.
1. Bankruptcy requires you to file with your spouse
To begin with, you do not necessarily have to file bankruptcy with your spouse. If you have shared debts, you may want to in order to have them discharged out of both of your names, but there is no requirement that you have to file together. Basically, if you share liability, file together. If you don’t, you can file separately.
2. Bankruptcy eliminates all your debts
This myth could be true, but it depends on what kinds of debt you have. Bankruptcy is only designed to eliminate unsecured debts, though it may sometimes be used to eliminate secured debts under certain circumstances.
The debts you usually cannot eliminate with Chapter 7 bankruptcy include:
- Child support
- Back taxes
- Student loans
However, you may be able to eliminate medical debt and credit card debt.
3. Choosing bankruptcy is the easy way out
Bankruptcy is not necessarily the easy way out. In fact, it takes a strong person to admit when they need help and to accept it. Bankruptcy is there to help people who have fallen onto hard times find ways to get out of debt and to get back on secure financial footing. It’s supposed to be a step up for those who need it.
Going through a bankruptcy isn’t easy, either. You have to meet specific requirements and will need to show that you can’t afford to pay back what you owe. You also will see your credit score take a significant hit and may not be able to get new lines of credit, mortgages or loans for some time into the future.
All in all, the myths about bankruptcy make it seem like it’s all bad, but the truth is that it can be a helpful way forward. Your attorney can talk to you more about if it’s right for you.