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Dispelling Bankruptcy Myths

Kinnaird Law Firm Oct. 30, 2023

Petition for Bankruptcy on an office tableChoosing to declare bankruptcy is a difficult decision that can have both short and long-term consequences. With so many horror stories and myths circulating, it’s no wonder why some may feel intimidated or overwhelmed by the prospect of filing for bankruptcy. If you're facing financial hardship and looking for relief, make sure to do your own research first: dispelling these common bankruptcy myths will help set you on the right path toward financial freedom. 

Our bankruptcy attorneys at Kinnaird Law Firm are here to provide you with reliable guidance and advocacy. Contact us today to schedule a consultation and learn how we can help you seek a better future. From our Colorado Springs law firm, we represent clients throughout Douglas County and El Paso County.  

Common Misconceptions About Bankruptcy

Bankruptcy is a legal process that can provide much-needed relief for those who find themselves facing overwhelming debt. If you're wondering whether bankruptcy might be a viable option for you or if you simply want to know more about this often-misunderstood legal procedure, it's important to separate fact from fiction and learn more about what bankruptcy really entails. 

“Bankruptcy will ruin your credit forever.” 

One of the biggest misconceptions about bankruptcy is that it will destroy your credit for eternity. While it's true that bankruptcy does have a negative impact on your credit score, it doesn’t last forever. Beyond that, bankruptcy can help you start fresh and rebuild your credit over time. It's important to remember that your credit score is not a static number and can always be improved with responsible financial behavior.  

“You'll lose all your assets in bankruptcy.” 

Bankruptcy can be a scary word. Many people believe that if they file for bankruptcy, they will lose everything they own. But the truth is, this is just a myth- you won't necessarily lose all your assets. Depending on the type of bankruptcy you file for, you may be able to keep your home, car, and other possessions. Remember, bankruptcy is designed to help individuals who are struggling with debt to get a fresh start and regain control of their finances.  

“You won't be able to get any loans after filing.” 

This simply isn't true. While it's true that bankruptcy can temporarily hurt your credit score, it's also true that many lenders are still willing to work with those who have filed for bankruptcy. This is because bankruptcy allows individuals to wipe the slate clean and start over. As long as you take steps to rebuild your credit responsibly, you can still secure a loan or line of credit in the future.  

“If you're married, you both have to file.”  

There are plenty of myths surrounding bankruptcy, and one of the most common is that if you're married, you both have to file. Thankfully, that's not true at all. While it's true that a married couple's finances may be intertwined, it's not necessary for both spouses to file for bankruptcy if only one of you is experiencing financial difficulties. It could actually be detrimental to both spouses' credit scores if they both file, even if they're filing jointly. That being said, it's important to consult with a bankruptcy attorney to fully understand your options and make the best decision for your financial situation as a couple. 

“It’s hard to qualify for bankruptcy.”  

Sure, the bankruptcy process involves a lot of paperwork and documentation, but the truth is that many people qualify for bankruptcy without much difficulty. Whether you're struggling with mounting debt or simply seeking a fresh start, filing for bankruptcy may be the solution you've been looking for. So, if you're considering bankruptcy to alleviate your financial stress, don't be discouraged by common misconceptions — it may be easier to qualify than you think. 

“You can only file for bankruptcy once.”  

While it's true that a bankruptcy filing has serious financial and credit consequences, the idea that you're locked into a lifetime of financial hardship after your first filing is just plain incorrect. In fact, the law specifically allows individuals to file for bankruptcy more than once. That being said, there are certain restrictions on when and how often you can file, and it's important to consult with a qualified bankruptcy attorney to understand your options. Don't let this common myth keep you from seeking the financial fresh start you deserve, even if you’ve filed before. 

“Those who file for bankruptcy have a spending problem.”  

Perhaps one of the most common myths is that those who file for bankruptcy need to do so because they have a spending problem. The reality is that there are many reasons why someone might need to file for bankruptcy, and overspending is just one of them. Medical bills, job loss, and unexpected life events are all factors that can quickly lead someone down the path of financial distress. If you're considering bankruptcy, know that you're not alone.  

“Bankruptcy won’t stop creditor harassment.”  

Many believe that filing for bankruptcy won't put an end to relentless creditor harassment, but this is not always true. Once a bankruptcy petition is filed, the court will issue an automatic stay that will prevent creditors from contacting you or attempting to collect any debt. This means no more harassing phone calls or letters in the mail. If the harassment continues, you can take legal action against the creditor.  

Get Help From an Experienced Bankruptcy Attorney

Bankruptcy is a powerful tool available to those struggling with unmanageable debt. Despite some misconceptions, if properly used, it can help you get back on track with your finances while providing you much-needed relief from creditor harassment and lawsuits.  

It’s important to remember that there are several different kinds of bankruptcy and depending on your unique financial situation, one may be more beneficial than another. If you’re considering bankruptcy as a way to get out of debt, it's important to arm yourself with knowledge so you can make the best decision for your future.  

Consult an experienced bankruptcy attorney who can assist in suggesting which kind of bankruptcy would be best for your particular case. Get the help you need today and start taking control of your financial future when you reach out to Kinnaird Law Firm in Colorado Springs, Colorado.