Even though New Jersey residents may know that filing for bankruptcy is one way to deal with overwhelming debt, many hesitate to file for it. This is because of the common myths circulating about bankruptcy, its alleged reflection on one’s character and credit score. Below, some of the common myths of bankruptcy are discussed and discredited.
Filers lose everything
There is a common belief that filers lose their house, car and any other personal belongings. The reality is that most possessions can be kept, depending on their value. In fact, in Chapter 7 bankruptcy, the debtor gives up virtually no possessions, with the allowed exceptions for necessities.
Paying off debts is a better option
Many people may believe that it is better to continue paying off one’s debt rather than file for bankruptcy. However, many believe are just making their monthly minimum and even that is a struggle for them. As a result, their debt continues to mount, as does the interest accumulating on them. Bankruptcy can actually allow them to start afresh and get their finances in control.
Filing for bankruptcy is a personal failure
Debtors believe that bankruptcy is a personal failing, an admission of failure. However, most debt is caused by medical bills, and those are likely unforeseen expenses. It is better to approach this as a tool to help control one’s finances.
There is no way to bounce back from bankruptcy
While it is true that a filer’s credit score will take a hit and they may have limited access to credit, this is only a temporary situation. There are various steps filers can take to restore their credit and open up lines of credit.
Filing for bankruptcy as a way to get control over one’s financial life is an option many should consider availing. An experienced attorney can discuss it with those who need guidance on how to wipe out most of their debt.