BANKRUPTCY MYTHS

We are bankruptcy attorneys located in Middletown, Ohio.  We specialize in bankruptcy filings.

Most have preconceived ideas about bankruptcy, but the most common stereotype of bankruptcy does not stir up alot of sympathy for most of us.  We picture a young, reckless American adult, privileged and unschooled in smart spending and saving, who has racked up credit card debt through frivolous living (picture:  vacations, fancy cars, a mortgage they can’t afford) who is suddenly reduced to eating Ramen noodles, pawning valuables, and asking friends to foot the bill at restaurants.  We see their demise and think, well, that serves you right.

But the truth is only a handful of bankruptcy actually look like this.  Surprised?  Don’t be.  The past decade has involved plenty of ups and downs in the U.S. economy, making Americans seasick as they struggle to get a hold of their finances in turbulent times.  As a result, the fact of bankruptcy has changed quite a bit.  While it’s true that the stereotype of the”irresponsible spender” characterized the bankruptcy field, let’s get one thing straight:  more factors than irresponsible spending drive people to bankruptcy.

There are quite a few myths reinforced by years of media and movies in the American mind that simply, are not true, especially now that bankruptcy is shifting in America.

 

Myth #1 – Only irresponsible spenders file bankruptcy

As I just pointed out, times are changing, and the economy has forced the hands of unlikely profiles to declare bankruptcy.  Nowadays, bankruptcy hits normal families with normal spending habits just as often as it hits reckless spenders among us.  For many people, filing bankruptcy is a desperate reach for a lifesaver at the mercy of expensive healthcare costs due to illness or injury, student debt, divorce proceedings, or just the rising cost of life:  food, housing, education, etc.  Job loss, too, plays a roll in bankruptcy.

Myth #2 – It’s nearly impossible to recovery financially from bankruptcy

Bankruptcy is our nation’s way of protecting the debtor and providing a route to financial freedom.  It is the path to recovery.  Of course, the way out is through sound and smart habits:  using credit cards wisely, ensuring that your credit is being reported back to the credit bureau, saving and paying bills on time.  Even in a tough financial climate, it is possible to regain a footing and get out of the nightmare of debt.

Myth #3 – You can discharge your entire debt load through bankruptcy

Certain types of debt cannot be discharged under the U.S. Bankruptcy Code.  If you think about it, we’d all be declaring bankruptcy if we could get rid of all of our debt so easily, and you can imagine how this federal protection would quickly become abused.  In 2005, the Bankruptcy Above Prevention and Consumer Protection Act (BAPCPA) prohibited student loans from being discharged through bankruptcy.  Debts incurred through improper behavior are not discharged, such as through fraud, malicious injury to a person, personal injury to another person, or injury caused by the debtor’s operation of a motor vehicle while intoxicated.  In addition, certain types of tax claims, debt for spouse or child support, and debts to the government are typically not discharged.  However, there are numerous amounts of debts which can be discharged through a bankruptcy.  To discuss your individual situation contact us today for your free consultation.

Myth #4 – Your credit is ruined forever if you file for bankruptcy

A bankruptcy will stay on your credit report for anywhere from 7 to 10 years, depending on the chapter you file.  However, you will be able to regain credit. The secret is to pay the bills you have on time and don’t have any debts go into collection.  Keep your credit clean and you will re-gain good credit again before you know it.

Myth #5 – College educated people with successful jobs rarely file bankruptcy

The institute for Financial Literacy reported in 2011 that “college education doesn’t appear to ward off bankruptcy as the rate of decree holders filing bankruptcy increased by 20%” in the five years prior to the report.  In addition, during those five years, bankruptcy filers with incomes above $60,000.00 increased their rate of filing by over 66%.

If you’ve gone to college, had a fairly successful life, and feel shame at the thought of declaring bankruptcy, understand that the numbers are shifting.  It’s normal to cringe at the thought of filing for bankruptcy, but the reality is that more and more educated, successful professionals have accepted this as the route to regain their feet under them when debt piles too high.

Bankruptcy does happen to good people.

More Information

For more information check out our website at www.middletown-bankruptcy.com

Contact our Middletown, Ohio bankruptcy office for your free consultation today.  We offer fair fees and monthly payment plans.