Common Myths About Bankruptcy
While filing for bankruptcy is not something you’d ever thought you would have to do, it’s important to remember that you are not alone. Bankruptcy filings are actually very common, with over 500,000 Americans filing for bankruptcy in 2020. There are many misconceptions about bankruptcy that can make this process seem very frightening. Let’s take a look at some common myths about bankruptcy to help you gain a better understanding of bankruptcy, as well as gain some peace of mind.
Common Myths About Bankruptcy
Bankruptcy Destroys Your Credit
One of the most popular misconceptions about bankruptcy is that bankruptcy will permanently destroy your credit. While it may take several years to regain full access to your credit, it may surprise you to know that you can actually receive offers for credit cards only weeks after your debt discharge.
Credit scores recover surprisingly quickly from bankruptcy. According to a report by the Federal Reserve of Philadelphia, persons who filed for Chapter 7 bankruptcy in 2010 had an average credit score of 538 on the Equifax scale. After the bankruptcies had been finalized around 6 months later, those peoples average credit score skyrocketed up to 620.
Married Couples Both Have to File
Another common myth about bankruptcy is that married couples both have to file. While this may be the case for some couples, the only reason that you and your spouse would both have to file for bankruptcy is if both of you are liable for the debt you are in. If the debt is only in you or your spouse’s name, then only you or your spouse will have to file for bankruptcy.
Bankruptcy Clears All Debt
Many people seem to be under the impression that filing for bankruptcy clears all of the debt that they have. When filing for Chapter 7 Bankruptcy, the debts that will be cleared are mostly what are known as unsecured debts. These debts include things like credit card debt, personal loan debt, unpaid utility bills, unpaid medical bills, and unpaid rent. It is possible for Chapter 7 to clear you of certain secured debts, but that will only take place under certain circumstances. If you are seeking clearance of any child support or alimony debt that you may have, you will unfortunately be unable to file. Under no circumstances can these debts be cleared. The same goes for any student loan debt that you may have.
Excessive Spending Before Filing Is Fine
Surprisingly, a number of people are under the impression that since credit card debt is cleared in Chapter 7 bankruptcy, they will be able to spend a lot of money before filing and will not have to pay that money back. This practice is what we in the legal world call “fraud”, and debt that is a result of fraud will not be removed under any bankruptcy filing.
About The Law Offices of Nick Del Pizzo
The burden of overwhelming debt can be too much for anyone to handle. That is where we come in to help. At The Law Offices of Nicholas J. Del Pizzo, III P.A. in Baltimore, our knowledge of and experience with bankruptcy law can help you get that fresh start by wiping out your debts, reorganizing your finances or saving your home. You will be working with an experienced and dedicated attorney who recognizes that people have legal needs that simply do not coincide with regular business hours. We will work hard to ensure that you recover from these unfortunate circumstances, and provide you with expert counsel every step of the way.
At the Law Offices of Nick Del Pizzo, we make ourselves available for our clients in a variety of case types. Ranging from foreclosure, bankruptcy, personal injury or medical malpractice. Whatever your legal need is, we are there for you, seven days a week. Your case becomes our cause, and we will seek the best resolution possible.