(1) Bankruptcy Means That You Wasted Your Money
One of the most common myths is that anyone who files for bankruptcy was very irresponsible with their money. This is often far from the truth. There are many cases where individuals have been laid off from work, or were unexpectedly hit with a medical crisis, causing a financial debacle. A divorce could seriously impact your finances, making bankruptcy the best way to resolve serious money problems.
(2) All of Your Debts Will Be Discharged Through Bankruptcy
Another is that by filing bankruptcy, all of your debts will be discharged and you can start again with a completely clean slate. In fact, not all debts are eligible for discharge. For example, you might be divorced and obligated to pay alimony and or child support. You will still have to satisfy those debts. In some cases, student loans can be discharged under certain special circumstances, but this is more difficult. Additionally, you are still responsible for any tax debts you incurred, although they might possibly be reduced. You cannot discharge old tax debt if you did not file tax returns.
Sometimes individuals plan on filing for bankruptcy, and just before doing so, make many large purchases in the belief that they will not have to pay for them due to the bankruptcy. This conduct is a red flag for the bankruptcy court. You could be charged with fraud in this case, or if you transfer assets to another family member prior to filing.
Finally, there is a myth that filing for bankruptcy will destroy your credit. In fact, many people are able to get a secured credit card after filing, and if they responsibly make regular payments on time, they can eventually rebuild their credit, enabling them to obtain less expensive credit cards down the line.
Schedule an Appointment with Our Bankruptcy Lawyers in Colorado Springs
If you have questions about bankruptcy, if you want to know if it’s right for you, contact our firm. Our friendly and concerned legal team will be able to explain all aspects of filing for bankruptcy and how it may, or may not, be your best route. We are dedicated to helping our clients find the right solution and create a better financial future. Speak to a Colorado Springs bankruptcy lawyer at the firm today to get information about your case.