Bankruptcy is a term which conjures up much emotion and a myriad of beliefs. Our society, as a whole, tends to paint a bleak picture of bankruptcy and those who declare it. We have probably all heard, at one point or another, “facts” such as: bankruptcy will ruin your credit for life; you will lose everything if you declare bankruptcy; only those who are deadbeats declare bankruptcy; and bankruptcy is too difficult to pursue. The fact is, however, that for many Americans bankruptcy is actually a necessary path towards financial freedom and success. For over one million financially struggling Americans annually, bankruptcy offers a much needed fresh start.
The following is a list of some of the top bankruptcy myths. It is our hope in debunking these myths, you will obtain an accurate picture of the bankruptcy process, enabling you to make an informed decision on whether bankruptcy is a viable tool for you.
Myth #1: Bankruptcy will destroy your credit forever—this is probably the number one myth concerning bankruptcy. Bankruptcy will significantly impact your credit. It will drop your credit score by 200 points or more. For 10 years following your bankruptcy, it will be viewable on your credit score. However, you can rebuild your credit score in as few as two years. For many debtors, filing for bankruptcy is actually the quickest way to achieve good credit. When you are behind on their bills, this information is constantly being reported and continuously damaging your credit. By filing for bankruptcy, all negative reports on your credit history stop. You can then begin to build positive credit, and achieve a positive credit score in just a short period of time.
Myth #2: You will lose everything if you declare bankruptcy—there is a common belief that by declaring bankruptcy, you will lose your home, vehicle, and other assets. The reality is that most of these possessions will be protected throughout the bankruptcy process. Under Chapter 13 bankruptcy, you keep all of your assets and are not at risk of losing anything. Under Chapter 7 bankruptcy, particularly in Florida, many of your assets will be exempt. Florida offers numerous exemptions to debtors including: your homestead, the earnings of the head of household, motor vehicles (up to $1,000), proceeds of life insurance, and some personal property. With proper planning and advice from your licensed bankruptcy attorney, you can protect those assets you care most about.
Myth #3: Only deadbeats declare bankruptcy—what do Abraham Lincoln, Henry Ford, Mark Twain, Walt Disney, Larry King, Burt Reynolds, Mickey Rooney, and Willie Nelson, all have in common? They declared bankruptcy then went on to much success, fame, and wealth. All of these individuals serve to highlight that bankruptcy can happen to anyone, even the most talented and intelligent among us. Millions of hardworking Americans will find it necessary to file for bankruptcy each year. For most people, their debts are not the result of frivolous spending or unwise monetary transactions. In fact, the number one cause of the majority of bankruptcies today is health insurance debts. No one should feel embarrassed or stigmatized by their decision to declare bankruptcy.
Myth #4: Filing for bankruptcy is too difficult to pursue—while bankruptcy does involve much paperwork, with the help of a knowledgeable bankruptcy attorney, the process will be smooth and simple. An attorney with experience in the field can advise you as to your eligibility and navigate you seamlessly through all necessary filings.
At Scott Law Group, PLC, we are committed to ensuring each of our clients receive unparalleled legal representation. Our seasoned attorney staff can fully advise you as to your bankruptcy options and help you select the best means to achieve a bright financial future. Call us today at (727) 754-5001 for a free consultation.